SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 2
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 31, 2012
Endeavour International Corporation
(Exact name of registrant as specified in its charter)
Registrants telephone number, including area code: (713) 307-8700
(Former Name or former address if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Explanatory Note: This Current Report on Form 8-K/A amends the Current Report on Form 8-K dated as of May 31, 2012. This Current Report on Form 8-K/A is being filed solely to correct a typographical error that appeared in the audited financial statements included as Exhibit 99.2 to the Form 8-K/A that was filed on June 8, 2012. In the previously filed Form 8-K/A, the date of the opinion of Ernst & Young LLP was shown as 8 June 2012. The date has been corrected to 7 June 2012. No other amendments or changes have been made.
As previously disclosed, on December 23, 2011, Endeavour International Corporation (the Company), through its wholly owned subsidiary, Endeavour Energy UK Limited (Endeavour UK), entered into a Sale and Purchase Agreement (the Purchase Agreement) with ConocoPhillips (U.K.) Limited, ConocoPhillips Petroleum Limited and ConocoPhillips (U.K.) Lambda Limited (collectively, the Sellers) to acquire the Sellers interest in three producing U.K. oil fields in the Central North Sea (the COP Acquisition). Under the terms of the Purchase Agreement, the Company can close on the acquisition of the Sellers interest in the Alba field, triggering the release of the funds from escrow (described below), without having to also concurrently close the acquisition of the Sellers interests in the other two fields. On May 31, 2012, the Company closed the portion of the COP Acquisition consisting of a 23.43% interest in the Alba field (the Alba Property) for aggregate cash consideration of approximately $217.5 million (reduced from $255.4 million as a result of purchase price adjustments since the effective date of January 1, 2011). In connection with closing the acquisition of the Alba Property separately from the other two fields, the Company paid a $2 million deposit to the Sellers. Prior to acquiring the Alba Property, the Company already held a 2.25% interest in the Alba field. The Company intends to pursue the closing of the other two fields in the near future.
Upon the closing of the purchase of the Alba Property, the net proceeds from the Companys Senior Notes due 2018 (the Notes) were released from escrow. The Company used approximately $205 million of the net proceeds from the sale of the notes together with approximately $14 million of borrowings under its revolving credit facility (the Revolving Credit Facility) with Cyan Partners, LP (Cyan), as administrative agent and the other lenders party thereto, to fund the cash consideration for the acquisition of the Alba Property.
In connection with the closing of the Alba Property portion of the COP Acquisition, the Company entered into several concurrent transactions:
Revolving Credit Facility Amendment
On May 31, 2012, the Company, Endeavour UK and certain of the Companys other subsidiaries entered into a First Amendment to Credit Agreement, US Security Agreement and Subsidiaries Guaranty (the First Amendment) providing for an increase in the amount available for borrowing under the Revolving Credit Facility from $40 million to $100 million upon closing of the acquisition of the Alba Property. The First Amendment effected certain amendments to the indebtedness and liens restrictive covenants in the Revolving Credit Facility and provided for the securing of the Companys and Endeavour UKs obligations under the Reimbursement Agreement (described below) ratably with the Revolving Credit Facility. In connection with the closing of the acquisition of the Alba Property, the Company drew down the entire additional $60 million available for borrowing.
The foregoing is qualified in its entirety by reference to the First Amendment, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
In addition, on May 31, 2012, the Company and Endeavour UK entered into a reimbursement agreement (the Reimbursement Agreement) with New Pearl S.à r.l. (the Pledgor), an unaffiliated third party entity in which the Company has no interest or control, and Cyan, as collateral agent. The Reimbursement Agreement was entered into in connection with the Pledgors entry into a credit support arrangement with BNP Paribas (the LC Provider), pursuant to which the Pledgor pledged cash to secure a letter of credit issued by the LC Provider for Endeavour UKs account in the amount of approximately £77 million (approximately $120 million as of May 31, 2012). The letter of credit secures Endeavour UKs decommissioning obligations for the Alba field until 2014.
Under the Reimbursement Agreement, Endeavour UK agrees to reimburse the Pledgor in the event that the letter of credit is drawn and the Pledgors cash is paid to the LC Provider. The Reimbursement Agreement also provides that Endeavour UK must pay a quarterly fee computed based on the outstanding amount of each letter of credit, along with an initial fee. Such fees and expenses will be deductible by Endeavour UK for U.K. tax purposes. Endeavour UK agrees to procure the release of the Pledgors pledged cash on or before December 31, 2013 (the expiration date of the letter of credit). The Company and its other material subsidiaries unconditionally guarantee Endeavour UKs obligations under the Reimbursement Agreement. In addition, the Companys and Endeavour UKs obligations under the Reimbursement Agreement are secured on a pari passu basis with their obligations under the Revolving Credit Facility by a first lien on substantially all of the assets of the Company and its material subsidiaries.
The foregoing is qualified in its entirety by reference to the Reimbursement Agreement, which is filed as Exhibit 10.2 to this Current Report on Form 8-K and incorporated herein by reference.
Also on May 31, 2012, the Company used approximately $255 million of the net proceeds from its offering of the Notes upon release from escrow to repay all amounts outstanding under the Credit Agreement, dated as of August 16, 2010, as amended (the Senior Term Loan), among the Company, Endeavour UK, Cyan, as administrative agent, and the other lenders party thereto. This repayment included a prepayment fee of approximately $7 million. Following the repayment by the Company, the Senior Term Loan was terminated and all of the liens on the collateral securing Endeavour UKs obligations thereunder were released.
The information set forth in Item 1.01 above with respect to the closing of the Alba Property portion of the COP Acquisition is incorporated by reference into this Item 2.01.
The information set forth in Item 1.01 above with respect to the First Amendment and the Reimbursement Agreement is incorporated by reference into this Item 2.03.
See Exhibit 99.1 (audited financial statements of the Alba Property purchased in the COP Acquisition for the years ending December 31, 2009, 2010 and 2011 and unaudited financial statements of the Alba Property purchased in the COP Acquisition for the three months ending March 31, 2011 and 2012).
See Exhibit 99.2 (unaudited pro forma combined financial statements of Endeavour International Corporation).
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.