Endeavour International Corporation has signed a definitive agreement to sell its Cygnus asset in the Southern Gas Basin of the United Kingdom sector of the North Sea to Bayerngas UK Ltd., the UK oil and gas subsidiary of Bayergas Norge AS, for a cash consideration of $110 million. The cash proceeds will not be burdened by any current taxes payable. The transaction has been approved by the boards of directors of both companies and is subject only to certain government and joint venture partner approvals. Closing is expected to be completed within 60 days.
"The sale of our Cygnus asset and the recent completion of the financing transaction places Endeavour in a fully funded position to execute our North Sea and United States opportunities and achieve near-term production and cash flow growth," said William L. Transier, chairman, chief executive officer and president.
"Our successful US initiative has already increased current daily production for the company to nearly 6,000 barrels of oil equivalent per day with approximately half from the US."
The company will use the proceeds from this sale and the recently completed financing transaction to focus on its Rochelle and Bacchus development projects in the UK North Sea and onshore Haynesville shale gas play in the US. A well at West Rochelle, in the block adjacent to Rochelle, is scheduled to spud in the next week and represents an opportunity to double the size of the Rochelle development.
"The Cygnus transaction brings to close the strategic review process regarding our North Sea assets and exemplifies the underlying value of our remaining portfolio in the UK and our long-term ability to build value for our investors," said Transier. "This sale allows us to reallocate resources to nearer term growth projects and take execution risk out of our business model."
Endeavour was advised during the strategic review process by Jefferies International Limited and Lambert Energy Advisory Ltd.
Endeavour also announced results of its latest well in the Haynesville play of Louisiana. The Woodard 10-1H horizontal well located in the Woodardville Field in Red River Parish, Louisiana, flowed at an initial rate of 22.6 million cubic feet per day (mmcfd) from a 24/64 choke at a flowing pressure of 8,053 pounds per square inch. This represents the third successive well in the Woodardville area to flow at these high rates.
Endeavour holds a 41.54 percent working interest in the well.
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