Endeavour International 8K Endeavour Announces 2012 Third Quarter | SEC 1 Nov 12

Third Quarter 2012

Earnings Review

November 1, 2012

Exhibit 99.2

2012

Third

Quarter

Highlights

Operational

Sales Volumes and Entitlement Production

•

Q3 sales volumes averaged over 11,000 barrels of oil equivalent per day (“boepd”) up 370% from the

comparable quarter in 2011 with U.K. crude oil accounting for 100% of the increase

•

Entitlement production averaged approximately 10,700 boepd

Successful 27

Licensing Round Results

•

In a competitive bidding process, awarded seven licenses (ten blocks) around existing core areas

•

All licenses are operated by the Company and have minimal capital requirements

Rochelle

•

Installation of the subsea pipes and umbilicals completed

•

First of the two planned development wells was drilled to the final casing point

•

First production expected in January 2013

Pennsylvania Marcellus

•

Effective October 1, 2012 Endeavour entered into an exchange with its co-owner for all upstream and

midstream assets, operatorship and increasing our working interest to 100% on 31,000 net acres

•

Currently three wells drilled and cased waiting on completion

•

Off-take solution secured for up to 10 mmcf/d firm capacity by year-end 2013

20%

80%

74%

25%

Average Daily Sales Volumes and Entitlement Production (BOE per day)

2012

2011

Q1 Sales = 4,174

Q3 Sales = 11,006

Q3 Sales = 2,972

US Gas US Oil UK Oil

UK Gas

81%

18%

Year-to-date

sales

volumes

215%

over

the

comparable

nine

month

period

2011

Entitlement production volume for the third quarter averaged 10,724 boepd

Third Quarter realized prices

•

Oil and condensate price = $99.31 per barrel

•

Gas price = $2.16 per Mcf

New

Blocks

Acquired

the

Licensing

Round

Current Production

Development Projects

Bacchus

Enoch

Columbus

Bittern

Alba

MacCulloch

Nicol

Rochelle

Renee

Rubie

The new licenses covering ten blocks are located in core areas around

•

The existing Rochelle development and R-blocks

•

Bittern and the Centurion South appraisal opportunity

Pennsylvania

Marcellus

Assets

–

Post

Exchange

31,000 net acres;100% END-operated

Existing gathering flowing to Emporium < 1

MMCF/d (market constrained)

Phase I expansion up to 10 MMCF/d

additional capacity by Q4 2013

Three horizontals waiting on completion

No new drilling required until 2014

2012

Third

Quarter

Highlights

Financial

Completed

$54

million

Tack

offering

the

12%

Senior

Notes

due

2018

•

Proceeds of $58 million used to redeem all the outstanding 12% Senior

Subordinated Notes due 2014

Increased

the

Revolving

Credit

Facility

$125

million

$10

million

undrawn

Summary Financial Results

Measure ($ in millions, except per share data)

Three Months Ended

Sept. 30,

Nine Months

Ended Sept. 30

2012

2011

2012

2011

Total natural gas, NGL and crude oil sales

$ 83.3

$ 10.3

$ 121.4

$ 43.5

Production costs (LOE)

$ 24.0

$ 3.5

$ 34.6

$ 14.9

Adjusted cash flow from operations

$ 59.3

$ 6.8

$ 86.8

$ 28.6

Adjusted EBITDA

$ 51.6

$ 2.4

$ 65.3

$ 14.1

Adjusted EBITDA per basic share

$ 1.11

$ 0.06

$ 1.58

$ 0.40

Higher revenues for the quarter were directly attributable to increased sales from Alba and

new production from Bacchus

Average production costs for the U.S. were lower due to declining gas prices and

production volumes. This was offset by a non-recurring expense of approximately $9.7

million related to the initial purchase price value allocation of inventory from Alba

Key Business Metrics

Measure ($ expense per boe)

Three Months

Ended Sept. 30,

Nine Months

Ended Sept. 30

2012

2011

2012

2011

Depreciation, depletion and amortization(DD&A)

$ 23.46

$ 27.29

$ 7.72

$ 19.65

$ 50.29

$ 12.92

$ 23.26

$ 31.43

$ 10.47

$ 22.17

$ 38.44

$ 13.76

Operating Expenses (OpEx)

•

Consolidated

$ 23.68

$ 27.91

$ 6.27

$ 12.79

$ 26.63

$ 9.75

$ 19.04

$ 27.15

$ 6.32

$ 17.65

$ 24.44

$ 14.14

General and Administrative Expense (G&A)

$4.96

$17.79

$8.46

$17.22

Interest Expense (IE)

•

Cash

•

Non-cash

$ 12.75

$ 5.08

$ 21.51

$ 23.31

$ 24.97

$ 9.69

$ 16.78

$ 21.89

Operating expenses in the U.K. were impacted during the quarter by a non-recurring

expense

approximately

$9.7

million

($7/barrel)

the

initial

purchase

price

allocation to crude oil inventory in the purchase of Alba

Year-to-date and quarterly G&A decreased due to constant corporate expense levels and

increased production in the U.K.

•

U.K.

•

U.S.

•

U.K.

•

U.S.

•

Consolidated

Adjusted EBITDA

Measure ($ in millions, except per share data)

Three Months Ended

Sept. 30,

Nine Months

Ended Sept. 30

2012

2011

2012

2011

Net Income (loss)

$ (33.7)

$ (63.3)

$ (119.8)

$ (86.4)

Unrealized (gain) loss on derivatives

1.2

(13.1)

2.2

(11.1)

Net Interest Expense

18.1

12.1

62.8

31.9

Letter of Credit Fees

9.4

12.4

Loss on early extinguishment of debt

21.7

0.4

Depreciation, depletion and amortization

23.8

5.4

42.3

18.7

Impairment of U.S. oil and gas properties

11.4

28.8

47.1

28.8

Income tax expense (benefit)

21.5

32.5

(3.4)

31.8

Adjusted EBITDA

$ 51.6

$ 2.4

$ 65.3

$ 14.1

Weighted-average basic shares

outstanding (in millions)

46.6

39.1

41.2

34.9

Adjusted EBITDA per basic share

$ 1.11

$ 0.06

$ 1.58

$ 0.40

Net

Income

increased

for

the

quarter

due

higher

sales

volumes

from

Alba

and

Bacchus,

offset by an increase in interest expense and the fees associated with the Letters of Credit

for decommissioning

Adjusted Net Income (Loss)

Measure ($ in millions, except per share data)

Three Months

Ended Sept. 30,

Nine Months Ended

Sept. 30

2012

2011

2012

2011

Net Income (loss)

$ (33.7)

$ (63.3)

$ (119.8)

$ (86.4)

Impairment of U.S. oil and gas properties

11.4

28.8

47.1

28.8

Unrealized (gain) loss (net of tax)

0.3

(13.0)

0.1

(12.2)

Loss on early extinguishment of debt (net of tax)

17.8

0.4

Deferred Tax expense related to U.K. tax rate change

8.4

25.4

8.4

25.4

Net Income (Loss) as Adjusted

$ (13.6)

$ (22.1)

$ (46.4)

$ (44.0)

Weighted-average basic shares outstanding

(in millions)

46.6

39.1

41.2

34.9

Adjusted earnings (loss) per basic share

$ (0.29)

$ (0.57)

$ (1.13)

$ (1.26)

During the first half of 2012, the Company incurred a doubling of interest expense while

both the Senior Term Loan and the 2018 Senior Notes were outstanding

Impairments on U.S. gas properties increased due to the continuing decline of average

natural gas prices

Debt Maturity Schedule

$135

$554

$115

$63

$50

$100

$150

$200

$250

$300

$350

$400

$450

$500

2013

2014

2015

2016

2017

2018

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

$10

Undrawn Credit Facility

Capex Update

Measure ($ in millions, except per share data)

Three Months

Ended Sept. 30,

Nine Months

Ended Sept. 30

2012

2011

2012

2011

Development Capital

$ 39.3

0.9

$ 21.3

$116.1

5.0

$41.1

4.8

Exploration Capital

3.2

0.8

4.3

25.4

9.2

8.5

31.3

57.9

Seismic, Leasehold, Miscellaneous

1.0

1.7

3.1

3.4

Total Direct Oil & Gas Capex

45.2

52.7

141.9

138.5

Capitalized Interest

8.3

4.0

20.1

9.9

Capitalized G&A Capex

4.9

3.8

14.7

12.1

Other Capex

0.9

0.2

3.5

0.7

Total Capital Expenditures

59.3

60.7

180.2

161.2

Acquisitions

190.8

45.0

Total Capex

$ 59.3

$ 60.7

$ 371.0

$206.2

•

U.K.

•

U.K.

•

U.S.

•

U.S.

LSE:ENDV

NYSE:END

www.endeavourcorp.com

Darcey Matthews

Director of Investor Relations

(713) 307-8711

darcey.matthews@endeavourcorp.com

INVESTOR CONTACTS:

Endeavour International Inactive 8-KEndeavour Announces 2012 Third Quarter