re: END (Endeavour Intl.) - some thoughts
Well, in a "blue moment" here I looked up at the recent news again and for matter of reference I re-examined the last 10Q. Let me provider some interesting insights I obtained. I can only encourage all participants to take a look at the 10Q document obtainable from SEC/EDGAR/IDEA to further comb thru the material facts there.
idea.sec.gov
1) Hedging position for 2009
- the company seems to have taken advantage of the high price environment of early summer 2008 to establish additional oil and gas hedges for the entire year 2009
Remainder
of 2008 2009 2010 2011 Total
Oil (1):
Fixed Price Swap (Mbbl)
227 697 573 487 1,984
Weighted Average Price ($/Barrel)
$ 68.87 $ 69.08 $ 68.39 $ 66.01 $ 68.10
Costless Collar (Mbbl)
400 — — 400
Weighted Average Ceiling Price ($/Barrel)
$ — $ 121.88 — — $ 121.88
Weighted Average Floor Price ($/Barrel)
$ — $ 100.00 — — $ 100.00
Gas (2):
Fixed Price Swap (MMcf)
669 1,387 1,032 627 3,715
Weighted Average Price ($/Mcf)
$ 10.86 $ 9.94 $ 9.53 $ 9.14 $ 9.86
Costless Collar (MMcf)
300 1,400 — — 1,700
Weighted Average Ceiling Price ($/Mcf)
$ 8.48 $ 16.14 $ — $ — $ 14.79
Weighted Average Floor Price ($/Mcf)
$ 6.57 $ 11.35 $ — $ — $ 1
2) Financial resources (table of maturities of debt obligations)
Note 3 – Debt Obligations
Our debt consisted of the following amounts on the indicated dates:
(Amounts in thousands)
September 30,
2008 December 31,
2007
Senior notes, 6% fixed rate, due 2012
$ 81,250 $ 81,250
Senior bank facility, variable rate, due 2011
113,000 110,000
Convertible bonds, due 2014
43,253 —
Second lien term loan, variable rate, due 2011
— 75,000
237,503 266,250
Less: debt discount
11,618 —
Long-term debt
$ 225,885 $ 266,250
Standby letters of credit outstanding for abandonment liabilities
$ 36,676 $ 40,788
Some musings that just came to my attention
3) Changing intérest rate base of senior debt ?
Given the $113m of senior indebtedness outstanding (var. interest rate) of which around $40m are converted via an interest rate swap into a fixed 5% rate (at least for 2009, could be longer) - it might be beneficial for the company to take advantage of those ultra-low longterm interest rates and convert the notional of $100m into a 10year fixed rate equivalent.
4) Repurchase trading convertible bonds on the open market !
The convertible bonds due 2014 have a pretty hefty coupon - 11.5% if I read it correctly. But they are REDEEMABLE and even better - the company is free to repurchase the beasts on the OPEN Market ! Now I don't have a current quote, but I could believe that as unsecured mezzanine corporate debt, they should be under water with the rest of the market. Why not repurchase all they can with their nice pillow of $60m cash.
5) After Repurchase, redeem the rest to get rid of 11.5% coupon convertible bonds. This would save us from unneeded interest rate payments goign forward.
6) Meet with warrant holders and offer them a deal to get some minimal cash for now worthless warrants (conversion price $+2 ). Some will gladly take them up on that as it would enable these funds/investors to show a gain in their books. This would rid us of future dilution.
7) After that'S donw - expand the borrowing base for the senior loan and go on "fishing" for remnants of fallen contenders in overlapping areas (e.g. Oilexco etc...) or take over marginal players and expand acreage.
rgrds
CROSSY |
