Each one in plain English, with the numbers worked through for a shareholder.
6 Nov 2006asset acquisition disposition● NeutralMajor
Endeavour completed the Talisman Expro Limited purchase on November 1, 2006 for $374 million after preliminary adjustments (estimated total net cash cost about $418 million), giving it its first UK production, about 8,800 BOE per day over the first half of 2006. It financed this with the 35 million share offering ($82 million gross), $125 million of Series A preferred, $150 million drawn on a new $225 million senior bank facility (BNP Paribas and Bank of Scotland) and $75 million from a second lien term loan at LIBOR plus 7% (Credit Suisse as agent). This resolves the May 2006 option agreement and adds secured debt with financial covenants. Series C and D preferred designations were filed but none issued, and bylaws were amended to opt out of certain Nevada control-share statutes.
Endeavour agreed on October 19, 2006 to sell 35,000,000 common shares through J.P. Morgan and Credit Suisse underwriters at $2.35 to the public ($2.24425 to the underwriters), with a 30-day option for 5,250,000 more; the offering closed October 25, 2006. It also agreed to sell $125 million of Series A convertible preferred stock at an initial conversion price of $2.50, with a 10.0% cumulative dividend if paid in cash and 10.42% if paid in stock. The rate drops to 8.5% (cash) or 8.92% (stock) if stockholders approve an exchange for a new series with extra antidilution protection. These raises, with a planned second lien term loan, fund the Talisman Expro purchase; the share issues dilute existing holders, and the new shares are priced well below the $5.02 level of the 2005 CFO grants and the 2005 notes' conversion price (about $5.02).
10 Oct 2006material agreement termination● NeutralMajor
On October 9, 2006 Endeavour changed its top management. William Transier became chairman, CEO and president, with pay raised to $800,000 a year from September 9, 2006, and he will be based in the UK office. John Seitz, formerly co-CEO, resigned as an officer and became vice chairman of the board; his employment agreement is replaced by a consulting agreement running through December 31, 2008 at $300,000 a year plus a bonus set by the board. Neither change accelerates vesting of existing options or restricted stock. This ends the co-CEO structure in place since February 2004.
On May 26, 2006 Endeavour's UK subsidiary signed a put and call option agreement with Paladin Resources to buy Talisman Expro Limited for $414 million (subject to adjustments, including for a January 1, 2006 economic date and $163 million of inter-company debt). TEL holds Goldeneye and Bittern, and will add Ivanhoe, Rob Roy, Hamish, Renee, Rubie, Caledonia and Alba. This is a much larger UK North Sea purchase than the Enoch stake. Closing is expected before year-end, subject to regulatory and third-party consents. Endeavour guarantees its subsidiary's obligations, $25 million in liquidated damages is payable if it fails to complete after the conditions are met, and the filing says financing commitments cover the full price.
Endeavour settled its litigation with The GHK Company, GHK/Potato Hills Limited Partnership and Brian F. Egolf on January 25, 2006. It must issue them 1,500,000 common shares within fifteen days, in return for a full mutual release and dismissal of all pending suits with prejudice. It must also file a resale registration within sixty days of the registration rights agreement. The filing gives no cash amount; the new shares dilute existing holders.
Endeavour's UK subsidiary agreed on December 8, 2005 to buy an 8% interest in the Enoch Field in the North Sea from Petro-Canada UK for about $11.6 million, with production expected in Q4 2006. Closing is expected around year-end, subject to partner and regulatory approvals. Paladin Expro Limited operates the field with a 24% interest. This adds a UK North Sea development asset.
New executive vice president and CFO Lance Gilliland received inducement grants of 400,000 restricted shares and options on 400,000 shares at $5.02, based on the August 26, 2005 start of his employment. Both vest one-third on each of the first three anniversaries. This adds shares for management and is dilutive to existing holders.
What it means for a shareholder
400,000 new shares at $5.02 to raise about $2.0m. Shares on issue before the raise aren't in the record, so the dilution can't be worked out.
Endeavour sold its 94.77% interest in PHT Partners, L.P. to Salamander Energy (Thailand) Limited for $19.5 million in cash on April 22, 2005. PHT's assets are a 21.08% interest in APICO, LLC, which holds a 35% interest in the Phu Horm Gas Field licenses in Thailand and two exploration blocks. This exits the Thailand holding, consistent with the North Sea focus. Separately, Endeavour announced a deal with ADTI to use the Arctic II rig to drill two exploratory wells in the UK North Sea in 2005, with locations and timing to come.
Endeavour sold a further $1.5 million of its 6.00% convertible senior notes due 2012 on March 1, 2005, bringing the total issued to $81.25 million, with the same terms as before. Fees across the offerings are estimated at $4.0 million. The $81.25 million total is above the original $65 million plus $16.25 million option.
Endeavour sold another $14.75 million of its 6.00% convertible senior notes due 2012 on February 24, 2005, as investors exercised part of their option from the January placement, bringing the total to $79.75 million. The terms are unchanged, including conversion at about $5.02 per share. Placement fees and expenses for both rounds are estimated at $4.0 million.
26 Jan 2005asset acquisition disposition▲ GoodMajor
On January 26, 2005 Endeavour completed the purchase of OER's minority interests for about $2 million in cash and 2.2 million Endeavour shares, resolving the November 2004 agreements. It now owns 100% of OER, renamed Endeavour Energy Norge AS. Shareholders were diluted by the new shares.
24 Jan 2005capital raising announcement● NeutralMajor
Endeavour raised $65 million through a private placement of 6.00% convertible senior notes due 2012, with investors holding a 30-day option for up to $16.25 million more. The notes convert into stock at about $5.02 per share and can be called after five years. Proceeds are for exploring and developing oil and gas properties, working capital and general corporate purposes. This is Endeavour's first convertible debt in this record and could dilute shareholders if converted. (The filing text says 'January 20, 2004', which appears to be a typo for 2005, as the indenture is dated January 20, 2005.)
Endeavour's subsidiary signed a license with PGS Exploration (UK) Ltd for seismic data covering 15,000 sq. km. of the Dutch North Sea, for £600,000 paid in installments. It is a data purchase, not a field or property acquisition, and it extends the company's North Sea focus into Dutch waters.
On January 3, 2005, Endeavour's board compensation committee granted stock options (exercise price $4.20) and restricted shares to six executive officers, and 3,460 fully vested shares to each of three outside directors in place of Q4 2004 fees. The two co-CEOs each received 250,000 options and 309,000 restricted shares in total. This adds shares for management and is dilutive to existing holders, but the filing gives no total figure.
30 Nov 2004asset acquisition disposition▲ GoodMajor
On November 23, 2004 Endeavour completed the purchase of Lundin's roughly 76% of OER for about US$27.6 million in cash, finishing the October agreement. OER brings interests in the Brage (4.4%), Njord (2.5%) and Agat (49%) fields, about 2,000 barrels a day of net production, and tax benefits the company values at about US$12 million. It also brings an existing Handelsbanken loan, with NOK 57 million (about US$9 million) outstanding, repayable through January 2006. The minority buyout is expected to close within 60 days.
Endeavour signed agreements with OER's 24 minority holders to buy the remaining 23.34% of OER, continuing the Lundin deal. Total consideration is about US$1.43 million in cash plus 2,183,617 Endeavour shares, with the share count subject to downward adjustment. Closing depends on the Lundin purchase closing first or at the same time, plus government approvals. For existing shareholders this means new shares will be issued.
Endeavour's Norwegian subsidiary agreed on October 12, 2004 to buy Lundin Petroleum's roughly 76% stake in Norwegian explorer OER Oil AS for NOK 172.5 million (about US$26 million) in cash. It plans to offer to buy the remaining minority shares for a mix of stock and cash. Closing is expected by year-end, subject to government approvals and other conditions. This is the first concrete step in the North Sea/Norway strategy described earlier.
Endeavour dismissed its auditor LJ Soldinger Associates LLC and hired KPMG LLP effective April 29, 2004, following the February 26, 2004 transactions that put a new management team in place with a North Sea-focused international strategy. The filing states there were no disagreements with the former auditor and no adverse or qualified opinions in the last two fiscal years.
