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United States
Securities and Exchange Commission
 Washington, D.C. 20549
 Form 10-K
 þ
    
    Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For
the Fiscal Year Ended December 31, 2009
 o
    
    Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from  to
 Commission file number: 001-32212
 Endeavour International Corporation
  Nevada
    
    88-0448389(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 1001 Fannin Street, Suite 1600, Houston, Texas
    
    77002(Address of principal executive offices)
    
    (Zip code)
 (713) 307-8700
  Title of Each Class of Stock
    
    Name of Each Exchange on Which RegisteredCommon Stock - $0.001 par value per share
    
    NYSE-Amex
  o þ
 o þ
 þ o
 o o
 þ
  Large accelerated filer o   
    Accelerated filer þ
    Non-accelerated filer o
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
   Documents Incorporated By Reference:




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##### 



Table of Contents
 Part I
    
    
    1Item 1. Business
    
    
    1Item 1A. Risk Factors
    
    
    15Item 1B. Unresolved Staff Comments
    
    
    33Item 2. Properties
    
    
    33Item 3. Legal Proceedings
    
    
    36Part II
    
    
    36Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    36Item 6. Selected Financial Data
    
    
    37Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    39Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    60Item 8. Financial Statements and Supplementary Data
    
    
    62Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    123Item 9A. Controls and Procedures
    
    
    123Item 9B. Other Information
    
    
    126Part IIIItem 10. Directors, Executive Officers and Corporate Governance of the Registrant
    
    
    126Item 11. Executive Compensation
    
    
    126Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    126Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    126Item 14. Principal Accounting Fees and Service
    
    
    127Part IV
    
    
    127Item 15. Exhibits and Financial Statement Schedules
    
    
    127Signatures
    
    
    128EX-3.6.CEX-10.7EX-10.13.CEX-10.15.BEX-10.26.BEX-12.1EX-12.2EX-21.1EX-23.1EX-23.2EX-31.1EX-31.2EX-32.1EX-32.2EX-99.1
  Quantities of natural gas are expressed in this Annual Report on Form 10-K in terms of
thousand cubic feet (Mcf) and million cubic feet (MMcf). Oil is quantified in terms of barrels
(Bbls) and thousands of barrels (Mbbls). Natural gas is compared to oil in terms of barrels of oil
equivalent (BOE), thousand barrels of oil equivalent (MBOE) or million barrels of oil equivalent
(MMBOE). One barrel of oil is the energy equivalent of six Mcf of natural gas. With respect to
information relating to our working interest in wells or acreage, net oil and gas wells or
acreage is determined by multiplying gross wells or acreage by our working interest therein.
References to number of potential well locations are gross, unless otherwise indicated.
 References to GAAP refer to U.S. generally accepted accounting principles.




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Endeavour International Corporation
 
 Part I
 
 Item 1. Business
  General
     1




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Endeavour International Corporation
   Strategic Alternatives for North Sea Assets
  
    
    Continuing to execute current operations plan;
    
    Entering into a joint venture to accelerate activities in the North Sea; and
    
    Selling specific assets or the North Sea entire business.
  Our Areas of Operation
 North Sea
   2




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Endeavour International Corporation
 Primary Development Fields
 Rochelle
   Cygnus
  Columbus
  Bacchus
  3




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Endeavour International Corporation
 Producing Fields
   United States
  Haynesville Shale
   4




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Endeavour International Corporation
    Marcellus Shale
  Alabama Gas Shales
  5




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Endeavour International Corporation
 Central Montana Oil-prone Shales
  Reserves
  Oil
    
    Gas
    
    Oil Equivalents(MBbls)
    
    (MMcf)
    
    (MBOE)2009:United Kingdom
    
    
    3,348
    
    
    
    78,316
    
    
    
    16,401United States
    
    
    18
    
    
    
    10,784
    
    
    
    1,8153,366
    
    
    
    89,100
    
    
    
    18,2162008:United Kingdom
    
    
    2,131
    
    
    
    27,130
    
    
    
    6,653United States
    
    
    18
    
    
    
    690
    
    
    
    133Discontinued operations  Norway
    
    
    1,406
    
    
    
    4,977
    
    
    
    2,2363,555
    
    
    
    32,797
    
    
    
    9,0222007:United Kingdom
    
    
    3,284
    
    
    
    11,812
    
    
    
    5,252Discontinued operations  Norway
    
    
    2,056
    
    
    
    8,434
    
    
    
    3,4615,340
    
    
    
    20,246
    
    
    
    8,713
 6




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Endeavour International Corporation
  Proved
    
    ProvedDeveloped
    
    Undeveloped
    
    Total ProvedReserves
    
    Reserves
    
    Reserves(MBOE)
    
    (MBOE)
    
    (MBOE)2009:United Kingdom
    
    
    2,103
    
    
    
    14,298
    
    
    
    16,401United States
    
    
    792
    
    
    
    1,023
    
    
    
    1,8152,895
    
    
    
    15,321
    
    
    
    18,2162008:United Kingdom
    
    
    2,595
    
    
    
    4,058
    
    
    
    6,653United States
    
    
    46
    
    
    
    87
    
    
    
    133Discontinued
Operations  Norway
    
    
    2,122
    
    
    
    114
    
    
    
    2,2364,763
    
    
    
    4,259
    
    
    
    9,0222007:United Kingdom
    
    
    3,947
    
    
    
    1,305
    
    
    
    5,252Discontinued Operations  Norway
    
    
    2,752
    
    
    
    709
    
    
    
    3,4616,699
    
    
    
    2,014
    
    
    
    8,713
 Preparation of Oil and Gas Reserve Information
    7




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Endeavour International Corporation
  Qualification of Reserves Preparers and Auditors
   2010 Planned Capital Expenditures
  8




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Endeavour International Corporation
   Company History
      9




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Endeavour International Corporation
   Geographical Data
  Competition
   Significant Customers
  Employees
  10




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Endeavour International Corporation
 Environmental Matters and Regulation
  North Sea
  United States
   11




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Endeavour International Corporation
    12




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Endeavour International Corporation
   Other Regulation of the Oil and Gas Industry
   Production Regulation
  
    
    the location of wells;
    
    the method of drilling and casing wells;
    
    the surface use and restoration of properties upon which wells are drilled;
 13




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Endeavour International Corporation
 
    
    the plugging and abandoning of wells; and
    
    notice to surface owners and other third parties.
  Regulation
  Title to Properties
  Offices
  14




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Endeavour International Corporation
 Available Information
    Financial Information about Segment and Geographical Areas
  Average Sales Prices and Production Costs by Geographical Area
  
 Item 1A. Risk Factors
 Cautionary Statement Concerning Forward-Looking Statements
  15




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Endeavour International Corporation
  
    
    our future financial position;
    
    our business strategy;
    
    budgets;
    
    projected costs, savings and plans;
    
    objectives of management for future operations;
    
    legal strategies; and
    
    legal proceedings.
  
    
    discovery, estimation, development and replacement of oil and gas reserves;
    
    decreases in proved reserves due to technical or economic factors;
    
    drilling of wells and other planned exploitation activities;
    
    timing and amount of future production of oil and gas;
    
    the volatility of oil and gas prices;
    
    availability and terms of capital;
    
    operating costs such as lease operating expenses, administrative costs and other
expenses;
    
    our future operating or financial results;
    
    amount, nature and timing of capital expenditures, including future development costs;
    
    cash flow and anticipated liquidity;
    
    availability of drilling and production equipment;
    
    uncertainties related to drilling and production operations in a new region;
    
    business strategy and the availability of acquisition opportunities; and
    
    factors not known to us at this time.
  16




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Endeavour International Corporation
  Risks related to our business
 We operate internationally and are subject to political, economic and other uncertainties.
  
    
    the risk of war, acts of terrorism, revolution, border disputes, expropriation,
renegotiation or modification of existing contracts, and import, export and transportation
regulations and tariffs;
    
    taxation policies, including royalty and tax increases and retroactive tax claims;
    
    exchange controls, currency fluctuations and other uncertainties arising out of foreign
government sovereignty over our international operations;
    
    laws and policies of the U.S. affecting foreign trade, taxation and investment; and
    
    the possibility of being subject to the exclusive jurisdiction of foreign courts in
connection with legal disputes and the possible inability to subject foreign persons to the
jurisdiction of courts in the U.S.
   17




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Endeavour International Corporation
 Future economic conditions in the U.S. and key international markets may materially adversely
impact our operating results, which could hinder or prevent us from meeting our future capital
needs.
    Oil and gas prices are volatile, and a decline in oil and gas prices would reduce our revenues,
profitability and cash flow and impede our growth.
  
    
    global supply of oil and gas;
    
    level of consumer product demand;
    
    technological advances affecting oil and gas consumption;
    
    global economic conditions;
    
    price and availability of alternative fuels;
 18




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Endeavour International Corporation
 
    
    actions of the Organization of Petroleum Exporting Countries and other state-controlled
oil companies relating to oil price and production controls;
    
    governmental regulations and taxation;
    
    political conditions in or affecting other oil-producing and gas-producing countries;
    
    weather conditions;
    
    the proximity, capacity, cost and availability of pipeline and other transportation
facilities; and
    
    the impact of energy conservation efforts.
   Competition for oil and gas properties and prospects is intense and some of our competitors have
larger financial, technical and personnel resources that give them an advantage in evaluating,
obtaining and developing properties and prospects.
   19




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Endeavour International Corporation
 We are dependent on our executive officers and need to attract and retain additional qualified
personnel.
   Our use of derivative transactions may limit future revenues from price increases and involves the
risk that our counterparties may be unable to satisfy their obligations to us.
   Risks related to executing our strategy and operations
 To maintain and grow our production and cash flow, we must continue to develop and produce
existing reserves and discover or acquire new oil and gas reserves to develop and produce.
  20




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Endeavour International Corporation
   We may be unable to make attractive acquisitions, and any acquisition we complete is subject to
substantial risks that could impact our business.
  
    
    the inability to estimate accurately the costs to develop the interests in oil and gas
prospects, the recoverable volumes of reserves, rates of future production and future net
cash flows attainable from the reserves;
    
    the assumption of unknown liabilities, losses or costs for which we are not indemnified
or for which the indemnity we receive is inadequate;
    
    the validity of assumptions about costs, including synergies;
    
    the impact on our liquidity or financial leverage of using available cash or debt to
finance acquisitions;
    
    the diversion of managements attention from other business concerns; and
    
    an inability to hire, train or retain qualified personnel to manage and operate our
growing business and assets.
  21




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Endeavour International Corporation
 Our expectations for future drilling activities will be realized over several years, making them
susceptible to uncertainties that could materially alter the occurrence or timing.
  Our drilling projects are based in part on seismic data, which cannot ensure the commercial success
of the project.
  Reserve estimates depend on many assumptions that may turn out to be inaccurate and any material
inaccuracies in the reserve estimates or underlying assumptions of our assets will materially
affect the quantities and present value of those reserves.
  22




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Endeavour International Corporation
 A significant portion of our total estimated net proved reserves at December 31, 2009 were
undeveloped, and those reserves may not ultimately be developed.
  Our offshore operations involve special risks that could increase our cost of operations and
adversely affect our ability to produce oil and gas.
  We have recently commenced exploration, production and development operations in the United States,
and as a result, our ability to successfully achieve our goals is subject to greater risk and
uncertainty.
  23




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Endeavour International Corporation
 We will not be the operator of all of the interests we own or acquire, and therefore we may not be
in a position to control the timing of development efforts, the associated costs, or the rate of
production of the reserves in respect of such interests.
  
    
    the operators expertise and financial resources;
    
    the timing and amount of their capital expenditures;
    
    the rate of production of the reserves;
    
    approval of other participants to drill wells and implement other work programs;
    
    the availability of suitable drilling rigs, drilling equipment, support vessels,
production and transportation infrastructure and qualified operating personnel; and
    
    selection of technology.
  Actual production could differ significantly from forecasts.
  Our insurance may not protect us against business and operating risks, including an operator of a
prospect in which we participate failing to maintain or obtain adequate insurance.
  24




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Endeavour International Corporation
  The cost of decommissioning is uncertain.
  Risks related to environmental and other regulations
 We are subject to environmental regulations that can have a significant impact on our
operations.
   25




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Endeavour International Corporation
    Governmental regulations to which we are subject could expose us to significant fines and/or
penalties and our cost of compliance with such regulations could be substantial.
  Federal legislation and state legislative regulatory initiatives relating to hydraulic fracturing
could result in increased costs and additional operating restrictions or delays as well as
adversely affect our support services.
  26




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Endeavour International Corporation
  Climate change legislation or regulations restricting emissions of greenhouse gases could result
in increased operating costs and reduced demand for the crude oil and natural gas that we produce.
  27




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Endeavour International Corporation
 The adoption of derivatives legislation by the U.S. Congress could have an adverse impact on our
ability to hedge risks associated with our business.
  Certain federal income tax deductions currently available with respect to oil and natural gas
exploration and development may be eliminated as a result of future legislation.
  28




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Endeavour International Corporation
  Risks related to access to capital and financing
 Our development and exploration operations, including our recent North Sea discoveries,
require substantial capital, and we may be unable to obtain needed capital or financing on
satisfactory terms, which could lead to a loss of properties and a decline in our oil and gas
reserves.
  
    
    our proved reserves;
    
    the level of natural gas and crude oil we are able to produce from existing wells;
    
    the prices at which natural gas and crude oil are sold; and
    
    our ability to acquire, locate and produce new reserves.
   29




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Endeavour International Corporation
  Our debt level could negatively impact our financial condition, results of operations and business
prospects.
  
    
    placing restrictions on certain operating activities;
    
    making it more difficult for us to satisfy our obligations under our indentures or the
terms of our other debt instruments and increasing the risk that we may default on our debt
obligations;
    
    requiring us to dedicate a substantial portion of our cash flow from operating
activities to required payments on debt, thereby reducing the availability of cash flow for
working capital, capital expenditures and other general business activities;
    
    limiting our ability to obtain additional financing in the future for working capital,
capital expenditures, acquisitions and other general business activities;
    
    decreasing our ability to withstand a downturn in our business or the economy
generally; and
    
    placing us at a competitive disadvantage against other less leveraged competitors.
  A change of control may adversely affect our liquidity and require refinancing of certain debt
instruments.
  30




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Endeavour International Corporation
 If we are unable to fulfill commitments under any of our oil and gas interests, we will lose our
interest, and our entire investment, in such interest.
  Risks relating to our common stock
 The trading price of our common stock may be volatile.
  If we, our existing stockholders or holders of our securities that are convertible into shares of
our common stock sell additional shares of our common stock, the market price of our common stock
could significantly decline.
    31




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Endeavour International Corporation
 Provisions in our articles of incorporation, bylaws and the Nevada Revised Statutes may discourage
a change of control.
    Risks related to potential impairments
 Lower oil and gas prices and other factors resulted in a ceiling test write-down and may in
the future result in additional ceiling test write-downs or other impairments.
   32




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Endeavour International Corporation
   Our financial results could be adversely affected by goodwill impairments.
  
 Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
 Drilling Statistics
  33




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Endeavour International Corporation
 Productive Wells
    
    Dry Holes
    
    In Progress WellsGross
    
    Net
    
    Gross
    
    Net
    
    Gross
    
    NetExploration2009:United Kingdom
    
    
    3.00
    
    
    
    0.82
    
    
    
    2.00
    
    
    
    0.52
    
    
    
    1.00
    
    
    
    0.10United States
    
    
    3.00
    
    
    
    1.32
    
    
    
    1.00
    
    
    
    0.22
    
    
    
    3.00
    
    
    
    1.042008:United Kingdom
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.00
    
    
    
    0.68United States
    
    
    1.00
    
    
    
    0.20
    
    
    
    
    
    
    
    
    
    
    
    1.00
    
    
    
    0.10Discontinued Operations   Norway
    
    
    5.00
    
    
    
    0.14
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2007:United Kingdom
    
    
    2.00
    
    
    
    0.50
    
    
    
    3.00
    
    
    
    0.75
    
    
    
    
    
    
    
    Discontinued Operations   Norway
    
    
    2.00
    
    
    
    0.05
    
    
    
    1.00
    
    
    
    0.04
    
    
    
    
    
    
    
    Development2009:United Kingdom
    
    
    2.00
    
    
    
    0.05
    
    
    
    
    
    
    
    
    
    
    
    1.00
    
    
    
    0.022008:United Kingdom
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.00
    
    
    
    0.02Discontinued Operations   Norway
    
    
    3.00
    
    
    
    0.08
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2007:United Kingdom
    
    
    1.00
    
    
    
    0.02
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Discontinued Operations   Norway
    
    
    3.00
    
    
    
    0.13
    
    
    
    1.00
    
    
    
    0.04
    
    
    
    
    
    
    
    
  34




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Endeavour International Corporation
 Productive Well Summary
  Oil
    
    GasGross
    
    Net
    
    Gross
    
    NetUnited Kingdom
    
    
    32.00
    
    
    
    0.79
    
    
    
    2.00
    
    
    
    0.14United States
    
    
    2.00
    
    
    
    1.12
    
    
    
    25.00
    
    
    
    7.16Total
    
    
    34.00
    
    
    
    1.91
    
    
    
    27.00
    
    
    
    7.30
 Acreage
  Developed
    
    UndevelopedGross
    
    Net
    
    Gross
    
    NetUnited Kingdom
    
    
    31,790
    
    
    
    8,108
    
    
    
    325,610
    
    
    
    86,566United States
    
    
    39,360
    
    
    
    11,690
    
    
    
    427,518
    
    
    
    102,342Ireland
    
    
    
    
    
    
    
    
    
    
    172,797
    
    
    
    34,559Total
    
    
    71,150
    
    
    
    19,798
    
    
    
    925,925
    
    
    
    223,467
  Sales Volumes and Prices
  Reserves
  35




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Endeavour International Corporation
  
 Item 3. Legal Proceedings
  
 Part II
 
 Item 5.  Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
  2009
    
    2008High
    
    Low
    
    High
    
    LowFirst Quarter
    
    $
    1.03
    
    
    $
    0.46
    
    
    $
    1.46
    
    
    $
    1.13Second Quarter
    
    
    2.21
    
    
    
    0.83
    
    
    
    2.56
    
    
    
    1.20Third Quarter
    
    
    1.50
    
    
    
    1.02
    
    
    
    2.30
    
    
    
    1.01Fourth Quarter
    
    
    1.30
    
    
    
    0.82
    
    
    
    1.45
    
    
    
    0.33
 Holders
  36




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Endeavour International Corporation
 Dividends
   
    
    cumulative;
    
    compounded quarterly based on the original issue price;
    
    payable in cash or common stock; and
    
    payable to the preferred stock investors prior to payment of any other dividend on any
other shares of our capital stock.
  
 Item 6. Selected Financial Data
   37




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Endeavour International Corporation
 Summary Financial Data(1)Year Ended December 31,(Amounts in thousands, except per share data)
    
    2009
    
    2008
    
    2007
    
    2006
    
    2005Summary Income Statement Data:Revenues
    
    $
    62,293
    
    
    $
    170,781
    
    
    $
    135,876
    
    
    $
    24,881
    
    
    $
    Operating Profit (Loss)
    
    
    (50,398
    )
    
    
    18,236
    
    
    
    23,778
    
    
    
    (11,516
    )
    
    
    (43,281
    )Net Income (Loss) to
Common Shareholders
    
    
    (62,206
    )
    
    
    45,681
    
    
    
    (60,315
    )
    
    
    (8,829
    )
    
    
    (31,531
    )Net Income (Loss) PerCommon Share  Basic:Continuing Operations
    
    $
    (0.84
    )
    
    $
    0.12
    
    
    $
    (0.50
    )
    
    $
    (0.08
    )
    
    $
    (0.50
    )Discontinued Operations
    
    
    0.36
    
    
    
    0.24
    
    
    
    0.01
    
    
    
    (0.02
    )
    
    
    0.08Total
    
    $
    (0.48
    )
    
    $
    0.36
    
    
    $
    (0.49
    )
    
    $
    (0.10
    )
    
    $
    (0.42
    )Net Income (Loss) Per Common Share  Diluted:Continuing Operations
    
    $
    (0.84
    )
    
    $
    0.15
    
    
    $
    (0.50
    )
    
    $
    (0.08
    )
    
    $
    (0.50
    )Discontinued Operations
    
    
    0.36
    
    
    
    0.17
    
    
    
    0.01
    
    
    
    (0.02
    )
    
    
    0.08Total
    
    $
    (0.48
    )
    
    $
    0.32
    
    
    $
    (0.49
    )
    
    $
    (0.10
    )
    
    $
    (0.42
    )Summary Balance Sheet Data:Working Capital
    
    $
    24,885
    
    
    $
    22,902
    
    
    $
    37,198
    
    
    $
    47,431
    
    
    $
    49,638Total Assets
    
    
    538,879
    
    
    
    737,470
    
    
    
    747,623
    
    
    
    774,470
    
    
    
    186,966Debt
    
    
    223,385
    
    
    
    227,855
    
    
    
    266,250
    
    
    
    306,250
    
    
    
    81,250Convertible Preferred Stock
    
    
    59,058
    
    
    
    125,000
    
    
    
    125,000
    
    
    
    125,000
    
    
    
    Equity
    
    
    60,133
    
    
    
    117,971
    
    
    
    70,149
    
    
    
    116,828
    
    
    
    40,344
 (1)
    
    Includes the following: 
    
    acquisition of producing properties and exploration acreage in the U.S. in 2009;
    
    acquisition of Talisman Expro Limited in November 2006;
    
    acquisition of working interests in the Enoch and Bacchus prospects in 2006;
    
    disposition of Thailand assets in 2005;
    
    acquisition of Norwegian assets in November 2004 and January 2005;
    
    disposition of non-core assets in 2004;
    
    acquisition of NSNV, Inc. in 2004; and
    
    unrealized gains (losses) on derivatives of $(55.6) million, $76.7 million, $(89.1)
million and $34.5 million in 2009, 2008, 2007 and 2006, respectively.
  38




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##### Table of Contents



Endeavour International Corporation
 
 Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
  Overview
     39




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##### Table of Contents



Endeavour International Corporation
       Results of Operations
  
    
    Our Enoch field began first production in mid 2007 and each of 2009 and 2008 reflect a
full years contribution of this asset.
    
    U.S. production reflects the results of our successful drilling of the Garwood well at
the end of 2008 and the purchase of producing assets in October 2009.
 40




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##### Table of Contents



Endeavour International Corporation
 
    
    In the first quarter of 2009, we suspended production at the IVRRH, Renee and Rubie
fields due to high operating costs.
    
    Natural production declines at certain of our fields have not been offset by infield
drilling resulting in production decreases at certain fields, particularly in 2009 at our
largest gas field  Goldeneye.
    
    There was an increase in gas production from our discontinued operations at the end of
2007 with the completion of a gas project at Njord in the fourth quarter of 2007.
  41




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##### Table of Contents



Endeavour International Corporation
 Year Ended December 31,2009
    
    2008
    
    2007Sales volume (1)Oil and condensate sales (Mbbls):United Kingdom
    
    
    690
    
    
    
    1,032
    
    
    
    1,274United States
    
    
    4
    
    
    
    
    
    
    
    Continuing operations
    
    
    694
    
    
    
    1,032
    
    
    
    1,274Discontinued operations  Norway
    
    
    310
    
    
    
    726
    
    
    
    519Total
    
    
    1,004
    
    
    
    1,758
    
    
    
    1,793Gas sales (MMcf):United Kingdom
    
    
    3,743
    
    
    
    6,532
    
    
    
    8,556United States
    
    
    320
    
    
    
    
    
    
    
    Continuing operations
    
    
    4,063
    
    
    
    6,532
    
    
    
    8,556Discontinued operations  Norway
    
    
    686
    
    
    
    2,322
    
    
    
    328Total
    
    
    4,749
    
    
    
    8,854
    
    
    
    8,884Oil equivalent sales (MBOE)United Kingdom
    
    
    1,314
    
    
    
    2,121
    
    
    
    2,700United States
    
    
    58
    
    
    
    
    
    
    
    Continuing operations
    
    
    1,372
    
    
    
    2,121
    
    
    
    2,700Discontinued operations  Norway
    
    
    425
    
    
    
    1,113
    
    
    
    574Total
    
    
    1,797
    
    
    
    3,234
    
    
    
    3,274Total BOE per day
    
    
    4,923
    
    
    
    8,835
    
    
    
    8,969Physical production volume (BOE per day):United Kingdom
    
    
    3,669
    
    
    
    5,804
    
    
    
    7,660United States
    
    
    162
    
    
    
    
    
    
    
    Continuing operations
    
    
    3,831
    
    
    
    5,804
    
    
    
    7,660Discontinued operations  Norway
    
    
    1,156
    
    
    
    3,033
    
    
    
    1,608Total
    
    
    4,987
    
    
    
    8,837
    
    
    
    9,268Realized Prices (2)Oil and condensate price ($  per Bbl):Before commodity derivatives
    
    $
    52.15
    
    
    $
    90.53
    
    
    $
    67.11Effect of commodity derivatives
    
    
    22.51
    
    
    
    (14.50
    )
    
    
    (2.13
    )Realized prices including commodity derivatives
    
    $
    74.66
    
    
    $
    76.03
    
    
    $
    64.98Gas price ($  per Mcf):Before commodity derivatives
    
    $
    5.77
    
    
    $
    11.44
    
    
    $
    6.27Effect of commodity derivatives
    
    
    2.69
    
    
    
    (0.35
    )
    
    
    1.79Realized prices including commodity derivatives
    
    $
    8.46
    
    
    $
    11.09
    
    
    $
    8.06Equivalent oil price ($  per BOE):Before commodity derivatives
    
    $
    44.44
    
    
    $
    80.54
    
    
    $
    53.78Effect of commodity derivatives
    
    
    19.71
    
    
    
    (8.84
    )
    
    
    3.68Realized prices including commodity derivatives
    
    $
    64.15
    
    
    $
    71.70
    
    
    $
    57.46Operating Costs ($  per BOE)
    
    $
    12.97
    
    
    $
    14.40
    
    
    $
    12.56
 42




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##### Table of Contents



Endeavour International Corporation
 (1)
    
    We record oil revenues on the sales method, i.e. when delivery has occurred. Actual
production may differ based on the timing of tanker liftings. We use the entitlements
method to account for sales of gas production.(2)
    
    The average sales prices reflect both our continuing and discontinued operations and
include realized gains and losses for derivative contracts we utilize to manage price risk
related to our future cash flows.(3)
    
    Operating costs reflect both our continuing and discontinued operations and are costs
incurred to operate and maintain our wells and related equipment and include cost of labor,
well service and repair, location maintenance, power and fuel, transportation, cost of
product and production related general and administrative costs.
    43




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##### Table of Contents



Endeavour International Corporation
 Operating Expenses
  DD&A and Impairment of Oil and Gas Properties
    General and Administrative (G&A) Expenses
  44




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##### Table of Contents



Endeavour International Corporation
 Year Ended December 31,2009
    
    2008
    
    2007Compensation
    
    $
    14,659
    
    
    $
    11,203
    
    
    $
    10,181Consulting, legal and accounting fees
    
    
    5,118
    
    
    
    4,679
    
    
    
    5,045Occupancy costs
    
    
    982
    
    
    
    1,130
    
    
    
    994Other expenses
    
    
    1,364
    
    
    
    4,004
    
    
    
    2,352Total gross cash G&A expenses
    
    
    22,123
    
    
    
    21,016
    
    
    
    18,572Non-cash stock-based compensation
    
    
    2,612
    
    
    
    2,928
    
    
    
    4,487Gross G&A expenses
    
    
    24,735
    
    
    
    23,944
    
    
    
    23,059Less: capitalized G & A expenses
    
    
    (7,769
    )
    
    
    (8,012
    )
    
    
    (7,206
    )Net G&A expenses
    
    $
    16,966
    
    
    $
    15,932
    
    
    $
    15,853
 Interest Expense and Other
  Income Taxes
  45




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##### Table of Contents



Endeavour International Corporation
 Total
    
    DiscontinuedContinuing
    
    Operations (Amounts in thousands)
    
    U.K.
    
    U.S.
    
    Other
    
    Operations
    
    Norway
    
    TotalYear Ended December 31, 2009:Net income (loss) before taxes
    
    $
    (52,041
    )
    
    $
    (31,167
    )
    
    $
    (11,479
    )
    
    $
    (94,687
    )
    
    $
    51,963
    
    
    $
    (42,724
    )Current tax (benefit) expense
    
    
    (5,739
    )
    
    
    40
    
    
    
    (26
    )
    
    
    (5,725
    )
    
    
    (603
    )
    
    
    (6,328
    )Deferred tax (benefit) expense
    
    
    (20,260
    )
    
    
    (20
    )
    
    
    (35
    )
    
    
    (20,315
    )
    
    
    4,791
    
    
    
    (15,524
    )Foreign currency losses on
deferred tax liabilities
    
    
    18,882
    
    
    
    
    
    
    
    
    
    
    
    18,882
    
    
    
    1,241
    
    
    
    20,123Total tax (benefit) expense
    
    
    (7,117
    )
    
    
    20
    
    
    
    (61
    )
    
    
    (7,158
    )
    
    
    5,429
    
    
    
    (1,729
    )Net income (loss) after taxes
    
    $
    (44,924
    )
    
    $
    (31,187
    )
    
    $
    (11,418
    )
    
    $
    (87,529
    )
    
    $
    46,534
    
    
    $
    (40,995
    )Year Ended December 31, 2008:Net income (loss) before taxes
    
    $
    66,129
    
    
    $
    (11,969
    )
    
    $
    (4,185
    )
    
    $
    49,975
    
    
    $
    63,244
    
    
    $
    113,219Current tax expense
    
    
    11,158
    
    
    
    
    
    
    
    10
    
    
    
    11,168
    
    
    
    27,879
    
    
    
    39,047Deferred tax expense
    
    
    22,673
    
    
    
    
    
    
    
    303
    
    
    
    22,976
    
    
    
    15,415
    
    
    
    38,391Foreign currency gains on
deferred tax liabilities
    
    
    (10,028
    )
    
    
    
    
    
    
    
    
    
    
    (10,028
    )
    
    
    (10,681
    )
    
    
    (20,709
    )Total tax expense
    
    
    23,803
    
    
    
    
    
    
    
    313
    
    
    
    24,116
    
    
    
    32,613
    
    
    
    56,729Net income (loss) after taxes
    
    $
    42,326
    
    
    $
    (11,969
    )
    
    $
    (4,498
    )
    
    $
    25,859
    
    
    $
    30,631
    
    
    $
    56,490Year Ended December 31, 2007:Net income (loss) before taxes
    
    $
    (68,704
    )
    
    $
    (10,233
    )
    
    $
    6,584
    
    
    $
    (72,353
    )
    
    $
    14,095
    
    
    $
    (58,258
    )Current tax (benefit) expense
    
    
    2,898
    
    
    
    (3
    )
    
    
    289
    
    
    
    3,184
    
    
    
    562
    
    
    
    3,746Deferred tax (benefit) expense
    
    
    (27,430
    )
    
    
    
    
    
    
    711
    
    
    
    (26,719
    )
    
    
    8,951
    
    
    
    (17,768
    )Foreign currency losses on
deferred tax liabilities
    
    
    1,327
    
    
    
    
    
    
    
    
    
    
    
    1,327
    
    
    
    3,514
    
    
    
    4,841Total tax (benefit) expense
    
    
    (23,205
    )
    
    
    (3
    )
    
    
    1,000
    
    
    
    (22,208
    )
    
    
    13,027
    
    
    
    (9,181
    )Net income (loss) after taxes
    
    $
    (45,499
    )
    
    $
    (10,230
    )
    
    $
    5,584
    
    
    $
    (50,145
    )
    
    $
    1,068
    
    
    $
    (49,077
    )
    46




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##### Table of Contents



Endeavour International Corporation
 Capital Program
  2009 Capital Resources
 Year Ended December 31,(Amounts in thousands)
    
    2009
    
    2008Cash
    
    $
    27,287
    
    
    $
    31,421Restricted Cash, related to rig commitments
    
    $
    2,879
    
    
    $
    20,739Debt, including current maturities
    
    $
    (223,385
    )
    
    $
    (227,855
    )Debt, net of Cash
    
    $
    (193,219
    )
    
    $
    (175,695
    )
 Year Ended December 31,2009
    
    2008Net cash provided by operating activities
    
    $
    55,711
    
    
    $
    133,180Net cash provided by (used in) investing activities
    
    $
    31,120
    
    
    $
    (64,851
    )Net cash used in financing activities
    
    $
    (97,700
    )
    
    $
    (46,613
    )
    47




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##### Table of Contents



Endeavour International Corporation
  
    
    repaid the outstanding balance of the second lien term loan in the first quarter of
2008;
    
    issued $40 million of the 11.5% convertible bonds in the first quarter of 2008;
    
    repaid $63.0 million of net debt in 2009; and
    
    repaid $75 million of the Series C Convertible Preferred Stock in the fourth quarter of
2009 with $25 million in cash and a $50 million note payable.
       48




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Endeavour International Corporation
   Recent Financing Arrangements
  Non-GAAP Measures
   49




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##### Table of Contents



Endeavour International Corporation
    
    
    our cash expenditures, or future requirements, for capital expenditures or contractual
commitments;
    
    changes in, or cash requirements for, our working capital needs;
    
    unrealized gains (losses) on derivatives;
    
    non-cash foreign currency gains (losses);
    
    our interest expense, or the cash requirements necessary to service interest and
principal payments on our debts;
    
    our preferred stock dividend requirements; and
    
    depreciation, depletion and amortization.
  50




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Endeavour International Corporation
  Year Ended December 31,2009
    
    2008
    
    2007Net income (loss)
    
    $
    (40,995
    )
    
    $
    56,490
    
    
    $
    (49,077
    )Depreciation, depletion and amortization
    
    
    38,701
    
    
    
    81,734
    
    
    
    76,850Impairment of oil and gas properties
    
    
    43,929
    
    
    
    36,970
    
    
    
    Deferred tax expense (benefit)
    
    
    4,599
    
    
    
    17,682
    
    
    
    (12,925
    )Gain on asset sales
    
    
    (47,308
    )
    
    
    
    
    
    
    Unrealized (gain) loss on derivatives
    
    
    55,598
    
    
    
    (76,666
    )
    
    
    89,132Other
    
    
    16,835
    
    
    
    4,597
    
    
    
    8,994Discretionary Cash Flow (1)
    
    $
    71,359
    
    
    $
    120,807
    
    
    $
    112,974Net income (loss)
    
    $
    (40,995
    )
    
    $
    56,490
    
    
    $
    (49,077
    )Impairment of oil and gas properties (net of tax) (2)
    
    
    28,263
    
    
    
    18,485
    
    
    
    Unrealized (gain) loss on derivatives (net of tax) (3)
    
    
    33,702
    
    
    
    (37,743
    )
    
    
    44,566Currency impact on deferred taxes
    
    
    20,123
    
    
    
    (20,709
    )
    
    
    4,842Net Income as Adjusted
    
    $
    41,093
    
    
    $
    16,523
    
    
    $
    331Net income (loss)
    
    $
    (40,995
    )
    
    $
    56,490
    
    
    $
    (49,077
    )Unrealized (gain) loss on derivatives
    
    
    55,598
    
    
    
    (76,666
    )
    
    
    89,132Net interest expense
    
    
    16,420
    
    
    
    21,301
    
    
    
    16,430Depreciation, depletion and amortization
    
    
    38,701
    
    
    
    81,734
    
    
    
    76,850Impairment of oil and gas properties
    
    
    43,929
    
    
    
    36,970
    
    
    
    Income tax expense (benefit)
    
    
    (1,729
    )
    
    
    56,729
    
    
    
    (9,180
    )Gain on asset sales
    
    
    (47,308
    )
    
    
    
    
    
    
    Adjusted EBITDA
    
    $
    64,616
    
    
    $
    176,558
    
    
    $
    124,155
 (1)
    
    Discretionary cash flow is equal to cash flow from operating activities
before the changes in operating assets and liabilities.(2)
    
    Net of tax benefits of $ (15,666) and $ (18,485) for 2009 and 2008,
respectively.(3)
    
    Net of tax expense (benefit) of $ (21,896), $38,923 and (44,566),
respectively. 51




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Endeavour International Corporation
 Outlook
2010 Planned Capital Expenditures
   Estimated Average Production (A)Daily Production (BOE per day)
    
    
    4,500
    
    
    to
    
    
    6,000Differentials (B)Oil ($/Bbl)
    
    $
    (5.00
    )
    
    to
    
    $
    (6.00
    )Gas ($Mcf)
    
    $
    (0.50
    )
    
    to
    
    $
    (0.60
    )Gas Percentage of Total
    
    
    55
    %
    
    to
    
    
    60
    %Lease Operating Expense ($  per barrel)
    
    $
    8.00
    
    
    to
    
    $
    10.00
 
 (A)
    
    Actual results may differ materially from these estimates.(B)
    
    For purposes of the estimates, assumptions of price differentials are based on
location, quality and other factors, excluding the effects of derivative financial
instruments. Gas price differentials are stated as premiums (discounts) from Henry Hub
pricing, and oil price differentials are stated as premiums (discounts) from West Texas
Intermediate pricing. Liquidity and Financial Resources
  52




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Endeavour International Corporation
        
    
    Continuing to execute current operations plan;
 53




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##### Table of Contents



Endeavour International Corporation
 
    
    Entering into a joint venture to accelerate activities in the North Sea; and
 
    
    Selling specific assets or the North Sea entire business.
  Disclosures about Contractual Obligations and Commercial Commitments
  Payments due by PeriodLessthan 1
    
    1-3
    
    3-5
    
    After 5(Amounts in thousands)
    
    Total
    
    Year
    
    Years
    
    Years
    
    YearsLong-term debtPrincipal
    
    $
    231,152
    
    
    $
    
    
    
    $
    161,192
    
    
    $
    69,960
    
    
    $
    Interest (1)
    
    
    56,962
    
    
    
    11,323
    
    
    
    13,728
    
    
    
    31,911
    
    
    
    Asset retirement obligations
    
    
    47,362
    
    
    
    3,249
    
    
    
    51
    
    
    
    
    
    
    
    44,062Operating leases for office
leases and equipment
    
    
    1,073
    
    
    
    638
    
    
    
    393
    
    
    
    42
    
    
    
    Rig commitments (2)
    
    
    17,055
    
    
    
    17,055
    
    
    
    
    
    
    
    
    
    
    
    Total Contractual Obligations
    
    $
    353,604
    
    
    $
    32,265
    
    
    $
    175,364
    
    
    $
    101,913
    
    
    $
    44,062
 (1)
    
    Assumes a 1.5% LIBOR rate. In addition, interest on our 11.5% convertible debt and $50
million note is added to the outstanding principal balance each quarter and reflected as due
upon maturity.(2)
    
    As is common in the oil and gas industry, we operate in many instances through joint ventures
under joint operating or similar agreements. Typically, the operator under a joint operating
agreement enters into contracts, such as rig commitment contracts, for the benefit of all
joint venture partners. Through the joint operating agreement, the non-operators reimburse,
and in some cases advance, the funds necessary to meet the contractual obligations entered
into by the operator. These obligations are typically shared on a working interest basis.
The joint operating agreement provides remedies to the operator in the event that the
non-operator does not satisfy its share of the contractual obligations. Occasionally, the
operator is permitted by the joint operating agreement to enter into lease obligations and
other contractual commitments that are then passed on to the non-operating joint interest
owners as lease operating expenses, frequently without any identification as to the long-term
nature of any commitments underlying such expenses. Once the timing for rig delivery and the
specific well to be drilled are determined, this obligation will be shared with the other
working interest owners. Off-Balance Sheet Arrangements
  54




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##### Table of Contents



Endeavour International Corporation
 Rig Commitments
  Critical Accounting Policies and Estimates
    Full Cost Accounting
   55




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Endeavour International Corporation
      56




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##### Table of Contents



Endeavour International Corporation
 Business Combinations
   Goodwill and Intangible Assets
    57




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##### Table of Contents



Endeavour International Corporation
  Dismantlement, Restoration and Environmental Costs
  Revenue Recognition
  Derivative Instruments and Hedging Activities
   58




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##### Table of Contents



Endeavour International Corporation
    Income Taxes
  Stock-Based Compensation Arrangements
   59




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##### Table of Contents



Endeavour International Corporation
 Fair Value
  
 Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
 Foreign Exchange Risk
  Commodity Price Risk
  60




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Endeavour International Corporation
   2010
    
    2011
    
    TotalOil:Fixed Price Swaps (Mbbl)
    
    
    533
    
    
    
    487
    
    
    
    1,020Weighted Average Price ($/Barrel)
    
    $
    68.39
    
    
    $
    66.01
    
    
    $
    67.25Gas: (1)Fixed Price Swaps (MMcf)
    
    
    1,032
    
    
    
    627
    
    
    
    1,659Weighted Average Price ($/Mcf)
    
    $
    8.68
    
    
    $
    8.32
    
    
    $
    8.54
 
 (1)
    
    Gas derivative contracts are designated in therms and have been converted to
Mcf at a rate of 10 therm to 1 Mcf. The exchange rate at December 31, 2009 was $1.62 to
£1.00.  Interest Rate Risk
  61




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Endeavour International Corporation
 
 Item 8.
    
    Financial Statements and Supplementary Data
 Report of Independent Registered Public Accounting Firm
 
     Internal Control  Integrated
Framework
 
 62




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##### Table of Contents



Endeavour International Corporation
Consolidated Balance Sheets
 December 31,2009
    
    2008AssetsCurrent Assets:Cash and cash equivalents
    
    $
    27,287
    
    
    $
    31,421Restricted cash
    
    
    2,879
    
    
    
    20,739Accounts receivable
    
    
    14,800
    
    
    
    22,325Prepaid expenses and other current assets
    
    
    10,118
    
    
    
    42,194Current assets of discontinued operations
    
    
    
    
    
    
    16,726Total Current Assets
    
    
    55,084
    
    
    
    133,405Property and Equipment, Net
    
    
    266,587
    
    
    
    232,346Goodwill
    
    
    211,886
    
    
    
    213,949Other Assets
    
    
    5,322
    
    
    
    9,165Long Term Assets of Discontinued Operations
    
    
    
    
    
    
    148,605Total Assets
    
    $
    538,879
    
    
    $
    737,470
  63




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Endeavour International Corporation

Consolidated Balance Sheets
 December 31,2009
    
    2008Liabilities and Stockholders EquityCurrent Liabilities:Accounts payable
    
    $
    12,401
    
    
    $
    38,630Current maturities of debt
    
    
    
    
    
    
    13,000Accrued expenses and other
    
    
    17,798
    
    
    
    36,642Current liabilities of discontinued operations
    
    
    
    
    
    
    22,231Total Current Liabilities
    
    
    30,199
    
    
    
    110,503Long-Term Debt
    
    
    223,385
    
    
    
    214,855Deferred Taxes
    
    
    80,692
    
    
    
    67,299Other Liabilities
    
    
    85,412
    
    
    
    55,791Long-term Liabilities of Discontinued Operations
    
    
    
    
    
    
    46,051Total Liabilities
    
    
    419,688
    
    
    
    494,499Commitments and ContingenciesSeries C Convertible Preferred Stock:Face value (liquidation preference)
    
    
    50,000
    
    
    
    125,000Net non-cash premiums under fair value accounting on redemption
    
    
    9,058
    
    
    
    Total Series C Convertible Preferred Stock
    
    
    59,058
    
    
    
    125,000Stockholders Equity:Series B preferred stock (Liquidation preference: $3,115
and $2,983 at 2009 and 2008, respectively)
    
    
    
    
    
    
    Common stock; shares issued and outstanding - 131,618
and 128,572 shares at 2009 and 2008, respectively
    
    
    132
    
    
    
    129Additional paid-in capital
    
    
    247,707
    
    
    
    244,471Treasury stock, at cost (498 and 327 shares at 2009
and 2008), respectively
    
    
    (587
    )
    
    
    (450
    )Accumulated other comprehensive loss
    
    
    
    
    
    
    (1,266
    )Accumulated deficit
    
    
    (187,119
    )
    
    
    (124,913
    )Total Stockholders Equity
    
    
    60,133
    
    
    
    117,971Total Liabilities and Stockholders Equity
    
    $
    538,879
    
    
    $
    737,470
  64




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##### Table of Contents



Endeavour International Corporation
Consolidated Statement of Operations
 Year Ended December 31,2009
    
    2008
    
    2007Revenues
    
    $
    62,293
    
    
    $
    170,781
    
    
    $
    135,876Cost of Operations:Operating expenses
    
    
    17,776
    
    
    
    32,317
    
    
    
    27,263Depreciation,
depletion and amortization
    
    
    34,020
    
    
    
    67,326
    
    
    
    68,982Impairment of oil and gas properties
    
    
    43,929
    
    
    
    36,970
    
    
    
    General and administrative
    
    
    16,966
    
    
    
    15,932
    
    
    
    15,853Total Expenses
    
    
    112,691
    
    
    
    152,545
    
    
    
    112,098Income (Loss) From Operations
    
    
    (50,398
    )
    
    
    18,236
    
    
    
    23,778Other Income (Expense):Derivatives:Realized gains (losses)
    
    
    35,422
    
    
    
    (28,578
    )
    
    
    12,048Unrealized gains (losses)
    
    
    (55,598
    )
    
    
    76,666
    
    
    
    (89,132
    )Interest expense
    
    
    (16,630
    )
    
    
    (22,975
    )
    
    
    (19,282
    )Interest income and other
    
    
    (7,483
    )
    
    
    6,626
    
    
    
    235Total Other Income (Expense)
    
    
    (44,289
    )
    
    
    31,739
    
    
    
    (96,131
    )Income (Loss) Before Income Taxes
    
    
    (94,687
    )
    
    
    49,975
    
    
    
    (72,353
    )Income Tax Expense (Benefit)
    
    
    (7,158
    )
    
    
    24,116
    
    
    
    (22,208
    )Income (Loss) from Continuing Operations
    
    
    (87,529
    )
    
    
    25,859
    
    
    
    (50,145
    )Discontinued Operations, net of tax:Income (loss) from operations
    
    
    (774
    )
    
    
    30,631
    
    
    
    1,068Gain on sale
    
    
    47,308
    
    
    
    
    
    
    
    Income from Discontinued Operations
    
    
    46,534
    
    
    
    30,631
    
    
    
    1,068Net Income (Loss)
    
    
    (40,995
    )
    
    
    56,490
    
    
    
    (49,077
    )Preferred Stock Dividends:Dividends declared
    
    
    9,757
    
    
    
    10,809
    
    
    
    11,238Non-cash charge under fair value accounting upon redemption
    
    
    11,454
    
    
    
    
    
    
    
    Total Preferred Stock Dividends
    
    
    21,211
    
    
    
    10,809
    
    
    
    11,238Net Income (Loss) to Common Stockholders
    
    $
    (62,206
    )
    
    $
    45,681
    
    
    $
    (60,315
    )Basic Net Income (Loss) per Common Share:Continuing operations
    
    $
    (0.84
    )
    
    $
    0.12
    
    
    $
    (0.50
    )Discontinued operations
    
    
    0.36
    
    
    
    0.24
    
    
    
    0.01Total
    
    $
    (0.48
    )
    
    $
    0.36
    
    
    $
    (0.49
    )Diluted Net Income (Loss) per Common Share:Continuing operations
    
    $
    (0.84
    )
    
    $
    0.15
    
    
    $
    (0.50
    )Discontinued operations
    
    
    0.36
    
    
    
    0.17
    
    
    
    0.01Total
    
    $
    (0.48
    )
    
    $
    0.32
    
    
    $
    (0.49
    )Weighted Average Number of Common Shares Outstanding:Basic
    
    
    130,291
    
    
    
    128,312
    
    
    
    123,118Diluted
    
    
    130,291
    
    
    
    178,312
    
    
    
    123,118
  65




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Endeavour International Corporation
Consolidated Statement of Cash Flows
 Year Ended December 31,2009
    
    2008
    
    2007Cash Flows from Operating Activities:Net income (loss)
    
    $
    (40,995
    )
    
    $
    56,490
    
    
    $
    (49,077
    )Adjustments to reconcile net income (loss) to net
cash provided by operating activities:Depreciation, depletion and amortization
    
    
    38,701
    
    
    
    81,734
    
    
    
    76,850Impairment of oil and gas properties
    
    
    43,929
    
    
    
    36,970
    
    
    
    Deferred tax expense (benefit)
    
    
    4,599
    
    
    
    17,682
    
    
    
    (12,925
    )Unrealized (gains) losses on derivatives
    
    
    55,598
    
    
    
    (76,666
    )
    
    
    89,132Gain on sale of Norwegian operations
    
    
    (47,308
    )
    
    
    
    
    
    
    Other
    
    
    16,835
    
    
    
    4,597
    
    
    
    8,994Changes in operating assets and liabilities:Decrease in receivables
    
    
    3,978
    
    
    
    9,795
    
    
    
    30,127(Increase) decrease in other current assets
    
    
    7,489
    
    
    
    (3,745
    )
    
    
    (984
    )Increase (decrease) in liabilities
    
    
    (27,115
    )
    
    
    6,323
    
    
    
    (13,611
    )Net Cash Provided by Operating Activities
    
    
    55,711
    
    
    
    133,180
    
    
    
    128,506Cash Flows From Investing Activities:Capital expenditures
    
    
    (131,393
    )
    
    
    (66,370
    )
    
    
    (88,007
    )Proceeds from sales, net of cash
    
    
    144,653
    
    
    
    259
    
    
    
    (Increase) decrease in restricted cash
    
    
    17,860
    
    
    
    1,260
    
    
    
    (20,133
    )Net Cash Provided by (Used in) Investing Activities
    
    
    31,120
    
    
    
    (64,851
    )
    
    
    (108,140
    )Cash Flows From Financing Activities:Repayments of borrowings
    
    
    (64,458
    )
    
    
    (120,000
    )
    
    
    (47,000
    )Borrowings under debt agreements
    
    
    1,400
    
    
    
    88,000
    
    
    
    7,000Redemption of preferred stock
    
    
    (25,000
    )
    
    
    
    
    
    
    Dividends paid
    
    
    (9,625
    )
    
    
    (10,625
    )
    
    
    (2,656
    )Financing costs paid
    
    
    
    
    
    
    (3,538
    )
    
    
    (263
    )Other financing
    
    
    (17
    )
    
    
    (450
    )
    
    
    (821
    )Net Cash Used in Financing Activities
    
    
    (97,700
    )
    
    
    (46,613
    )
    
    
    (43,740
    )Net Increase (Decrease) in Cash and Cash Equivalents
    
    
    (10,869
    )
    
    
    21,716
    
    
    
    (23,374
    )Cash and Cash Equivalents, Beginning of Period
    
    
    38,156
    
    
    
    16,440
    
    
    
    39,814Cash and Cash Equivalents, End of Period
    
    $
    27,287
    
    
    $
    38,156
    
    
    $
    16,440Cash and Cash Equivalents, End of Period:Continuing operations
    
    $
    27,287
    
    
    $
    31,421
    
    
    $
    13,810Discontinued operations
    
    
    
    
    
    
    6,735
    
    
    
    2,630Total
    
    $
    27,287
    
    
    $
    38,156
    
    
    $
    16,440
  66




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Endeavour International Corporation
Consolidated Statement of Stockholders Equity
 AccumulatedAdditional
    
    Other
    
    
    
    
    
    Total
    
    TotalCommon
    
    Treasury
    
    Paid-In
    
    Comprehensive
    
    Accumulated
    
    Stockholders
    
    ComprehensiveStock
    
    Stock
    
    Capital
    
    Loss
    
    Deficit
    
    Equity
    
    Income (Loss)Balance, December 31, 2006
    
    $
    119
    
    
    $
    
    
    
    $
    226,988
    
    
    $
    
    
    
    $
    (110,279
    )
    
    $
    116,828
    
    
    $Preferred stock dividend
    
    
    6
    
    
    
    
    
    
    
    10,509
    
    
    
    
    
    
    
    (11,238
    )
    
    
    (723
    )Amortization of deferred
compensation
    
    
    
    
    
    
    
    
    
    
    4,975
    
    
    
    
    
    
    
    
    
    
    
    4,975Other
    
    
    2
    
    
    
    
    
    
    
    (933
    )
    
    
    
    
    
    
    
    
    
    
    (931
    )Comprehensive Loss:Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (49,077
    )
    
    
    (49,077
    )
    
    
    (49,077
    )Other comprehensive loss (net of tax):Unrealized loss on derivative
instruments, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (852
    )
    
    
    
    
    
    
    (852
    )
    
    
    (852
    )Unrealized gain (loss) on
available-for-sale
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (71
    )
    
    
    
    
    
    
    (71
    )
    
    
    (71
    )Balance, December 31, 2007
    
    $
    127
    
    
    $
    
    
    
    $
    241,539
    
    
    $
    (923
    )
    
    $
    (170,594
    )
    
    $
    70,149
    
    
    $
    (50,000
    )Preferred stock dividend
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,809
    )
    
    
    (10,809
    )Amortization of deferred
compensation
    
    
    
    
    
    
    
    
    
    
    3,226
    
    
    
    
    
    
    
    
    
    
    
    3,226Treasury stock repurchase
    
    
    
    
    
    
    (450
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (450
    )Other
    
    
    1
    
    
    
    
    
    
    
    (294
    )
    
    
    
    
    
    
    
    
    
    
    (293
    )Comprehensive Loss:Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56,490
    
    
    
    56,490
    
    
    
    56,490Other comprehensive loss (net of tax):Unrealized loss on derivative
instruments, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (342
    )
    
    
    
    
    
    
    (342
    )
    
    
    (342
    )Unrealized gain (loss) on
available-for-sale
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )Balance, December 31, 2008
    
    $
    128
    
    
    $
    (450
    )
    
    $
    244,471
    
    
    $
    (1,266
    )
    
    $
    (124,913
    )
    
    $
    117,970
    
    
    $
    56,148
  67




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Endeavour International Corporation
Consolidated Statement of Stockholders Equity
 AccumulatedAdditional
    
    Other
    
    
    
    
    
    Total
    
    TotalCommon
    
    Treasury
    
    Paid-In
    
    Comprehensive
    
    Accumulated
    
    Stockholders
    
    ComprehensiveStock
    
    Stock
    
    Capital
    
    Loss
    
    Deficit
    
    Equity
    
    Income (Loss)Balance, December 31, 2008
    
    $
    128
    
    
    $
    (450
    )
    
    $
    244,471
    
    
    $
    (1,266
    )
    
    $
    (124,913
    )
    
    $
    117,970
    
    
    $
    56,148Preferred stock dividend
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,211
    )
    
    
    (21,211
    )Amortization of deferred
compensation
    
    
    
    
    
    
    
    
    
    
    3,163
    
    
    
    
    
    
    
    
    
    
    
    3,163Treasury stock repurchase
    
    
    
    
    
    
    (137
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (137
    )Other
    
    
    4
    
    
    
    
    
    
    
    73
    
    
    
    
    
    
    
    
    
    
    
    77Comprehensive Loss:Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (40,995
    )
    
    
    (40,995
    )
    
    
    (40,995
    )Other comprehensive income (net of tax):Unrealized loss on derivative
instruments, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,194
    
    
    
    
    
    
    
    1,194
    
    
    
    1,194Unrealized gain (loss) on
available-for-sale
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    72
    
    
    
    
    
    
    
    72
    
    
    
    72Balance, December 31, 2009
    
    $
    132
    
    
    $
    (587
    )
    
    $
    247,707
    
    
    $
    
    
    
    $
    (187,119
    )
    
    $
    60,133
    
    
    $
    (39,729
    )
  68




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
 Note 1  Description of Business
  Note 2  Summary of Significant Accounting Policies
 Basis of Presentation and Use of Estimates
   Principles of Consolidation
  Cash and Cash Equivalents
  69




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
 Restricted Cash
  Inventories
  Full Cost Accounting for Oil and Gas Operations
     70




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
   Other Property and Equipment
  Capitalized Interest
  71




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
 Marketable Securities
  Business Combinations
   Goodwill and Intangible Assets
  Dismantlement, Restoration and Environmental Costs
  72




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
  Revenue Recognition
  Significant Customers
  Derivative Instruments and Hedging Activities
   73




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
     Concentrations of Credit and Market Risk
    74




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
  Foreign Currency Translation
  Income Taxes
  Share-Based Payments
  75




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
  Adoption of New Accounting Standards
  
    
    Fair value option Guidance allowing entities to choose to measure many financial
instruments and certain other items at fair value. This standard expanded the use of fair
value measurement and applied to entities that elect the fair value option.
 
    
    Fair value measurement and disclosure Framework for measuring fair value and expanded
disclosures about such measurements. The new standards do not require new fair value
measurements, rather, the provisions apply when fair value measurements are performed under
other accounting pronouncements.
  
    
    Business combinations Guidance related to the measurement of identifiable assets
acquired, liabilities assumed and disclosure of information related to business
combinations and their effect.
 
    
    Noncontrolling interests Guidance for the noncontrolling interest in a subsidiary and
for the deconsolidation of a subsidiary. Specifically, this standard requires the
recognition of a noncontrolling interest (minority interest) as a component of consolidated
equity. Similarly, the new standard requires consolidated net income and comprehensive
income to be reported at amounts that include the amounts attributable to both the parent
and the noncontrolling interests.
 
    
    Expanded disclosures of derivatives Expanded and detailed financial statement
disclosures for derivatives and hedged financial instruments. This standard applies to all
derivatives and non-derivative instruments designated and qualifying as hedges, including
bifurcated derivative instruments and related hedged items.
 
    
    Convertible debt Guidance for convertible debt that may be settled in part or in
whole in cash upon conversion requiring issuers of this form of debt to account for its
debt and equity components separately. The new guidance also expands the definition of
mandatorily redeemable convertible preferred shares that should be classified as
liabilities.
 
    
    Share-based payments Guidance for instruments that are granted in share-based payment
transactions to treat unvested share-based payment awards with non-forfeitable rights to
dividend or dividend equivalents as a separate class of securities in calculating earnings
per share (EPS). The impact of the adoption of this standard on our weighted
 76




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
 average shares outstanding and EPS was not material, therefore, we have not restated prior
periods.
 
    
    Fair value Framework for measuring fair value and expanded disclosures about fair
value measurements. New fair value measurements are not required; rather, the provisions
apply when fair value measurements are performed under other accounting pronouncements.
  
    
    Subsequent Events Standards of accounting for and disclosure of events that occur
after the balance sheet date but before the financial statements are issued.
  
    
    Oil and gas modernization Revised oil and gas reserve estimation and disclosure
requirements. The accounting standards update revised the definition of proved oil and gas
reserves to require that the average, first-day-of-the-month price during the 12-month
period before the end of the year rather than the year-end price, must be used when
estimating whether reserve quantities are economical to produce and when calculating the
aggregate amount of (and changes in) future cash inflows related to the standardized
measure of discounted future net cash flows.
 Note 3  Discontinued Operations
   77




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Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
 December 31, 2009
    
    December 31, 2008Current Assets:Cash
    
    $
    
    
    
    $
    6,735Accounts receivable
    
    
    
    
    
    
    4,559Prepaid expenses and other
    
    
    
    
    
    
    5,432
    
    
    
    16,726Long-term Assets:Property, plant and
equipment, net
    
    
    
    
    
    
    80,611Goodwill
    
    
    
    
    
    
    67,994
    
    
    
    148,605Current Liabilities:Accounts payable
    
    
    
    
    
    
    (3,717
    )Accrued expenses and other
    
    
    
    
    
    
    (18,514
    )
    
    
    
    (22,231
    )Long-term Liabilities:Deferred tax liability
    
    
    
    
    
    
    (36,828
    )Asset retirement obligation
    
    
    
    
    
    
    (9,223
    )(46,051
    )Net Assets and Liabilities
    
    $
    
    
    
    $
    97,049
 78




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
 Year Ended December 31,2009
    
    2008
    
    2007Sales
    
    $
    17,550
    
    
    $
    89,660
    
    
    $
    40,188Income before Taxes
    
    $
    4,654
    
    
    $
    63,244
    
    
    $
    14,096Income Tax Expense
    
    
    (5,428
    )
    
    
    (32,613
    )
    
    
    (13,028
    )Income (Loss) from Operations
    
    
    (774
    )
    
    
    30,631
    
    
    
    1,068Gain on sale
    
    
    47,308
    
    
    
    
    
    
    
    Net Income from Discontinued Operations
    
    $
    46,534
    
    
    $
    30,631
    
    
    $
    1,068
 Note 4  Prepaid Expenses and Other Current Assets
  December 31,2009
    
    2008Fair market value of commodity derivatives  current
    
    $
    2,890
    
    
    $
    31,649Prepaid insurance
    
    
    1,506
    
    
    
    1,322Inventory
    
    
    4,450
    
    
    
    5,109Other
    
    
    1,272
    
    
    
    4,114$
    10,118
    
    
    $
    42,194
 79




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
 Note 5  Property and Equipment
  December 31,2009
    
    2008Oil and gas properties under the full cost method:Subject to amortization
    
    $
    275,278
    
    
    $
    239,024Not subject to amortization:Acquired in 2009
    
    
    51,797
    
    
    
    Acquired in 2008
    
    
    32,970
    
    
    
    37,288Acquired in 2007
    
    
    10,235
    
    
    
    14,746Acquired prior to 2007
    
    
    59,551
    
    
    
    82,522429,831
    
    
    
    373,580Other oil and gas assets
    
    
    
    
    
    
    4,875Computers, furniture and fixtures
    
    
    3,560
    
    
    
    3,236Total property and equipment
    
    
    433,391
    
    
    
    381,691Accumulated depreciation, depletion and amortization
    
    
    (166,804
    )
    
    
    (149,345
    )Net property and equipment
    
    $
    266,587
    
    
    $
    232,346
   80




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements  ( )
 Costs Incurred in the Year Ended December 31,2009
    
    2008
    
    2007
    
    Prior to 2007
    
    TotalAcquisition costs
    
    $
    10,662
    
    
    $
    807
    
    
    $
    
    
    
    $
    30,292
    
    
    $
    41,761Exploration costs
    
    
    38,158
    
    
    
    28,528
    
    
    
    9,260
    
    
    
    29,261
    
    
    
    105,207Capitalized interest
    
    
    2,977
    
    
    
    3,635
    
    
    
    975
    
    
    
    
    
    
    
    7,587Total oil and gas properties not
subject to amortization
    
    $
    51,797
    
    
    $
    32,970
    
    
    $
    10,235
    
    
    $
    59,553
    
    
    $
    154,555
  Note
6  Goodwill
  December 31,2009
    
    2008Balance at beginning of year
    
    $
    281,943
    
    
    $
    283,324Allocation of goodwill to discontinued operations sold
    
    
    (67,994
    )
    
    
    Adjustments
    
    
    (2,063
    )
    
    
    (1,381
    )Balance at end of year
    
    $
    211,886
    
    
    $
    281,943
 81




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements  ( )
 Note
7  Other Assets
  2009
    
    2008Intangible
assets  workforce in place:Gross
    
    $
    4,800
    
    
    $
    4,800Accumulated amortization
    
    
    (3,919
    )
    
    
    (3,363
    )881
    
    
    
    1,437Debt issuance costs
    
    
    3,875
    
    
    
    5,714Fair market value of long-term portion of commodity derivatives
    
    
    318
    
    
    
    1,702Other
    
    
    248
    
    
    
    312$
    5,322
    
    
    $
    9,165
   Note
8  Accrued Expenses
  December 31,2009
    
    2008Derivative liability
    
    $
    6,817
    
    
    $
    1,193Foreign taxes payable
    
    
    1,926
    
    
    
    6,655Deferred foreign taxes payable
    
    
    
    
    
    
    15,825Accrued interest
    
    
    2,432
    
    
    
    30Preferred dividends
    
    
    1,143
    
    
    
    1,011Accrued compensation
    
    
    4,311
    
    
    
    2,135Crude oil imbalance
    
    
    
    
    
    
    8,954Other
    
    
    1,169
    
    
    
    839$
    17,798
    
    
    $
    36,642
 82




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements  ( )
 Note
9  Debt Obligations
  December 31,
    
    December 31,2009
    
    2008Senior notes, 6% fixed rate, due 2012
    
    $
    81,250
    
    
    $
    81,250Senior bank facility, variable rate, due 2011
    
    
    49,942
    
    
    
    113,000Convertible bonds, 11.5%, due 2014
    
    
    49,838
    
    
    
    44,496Subordinated notes, 12.5%, due 2014
    
    
    50,122
    
    
    
    231,152
    
    
    
    238,746Less: debt discount
    
    
    (7,767
    )
    
    
    (10,891
    )Less: current maturities
    
    
    
    
    
    
    (13,000
    )Long-term debt
    
    $
    223,385
    
    
    $
    214,855Standby letters of credit outstanding for abandonment liabilities
    
    $
    33,388
    
    
    $
    30,115
  2010
    
    $
    2011
    
    
    69,9422012
    
    
    91,2502013
    
    
    10,0002014
    
    
    59,960Thereafter
    
    
    
  6% Senior notes, due 2012
  83




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements  ( )
  Senior bank facility
    
    
    a maximum consolidated debt to earnings before interest, taxes, depreciation and
amortization (EBITDA) ratio of 3.0:1;
    
    a minimum current assets to current liabilities ratio of 1.1:1;
    
    a minimum debt coverage ratio of 1.2:1 for the initial tranche and 1.15:1 for the second
tranche;
    
    a minimum field life net present value (NPV) to loans outstanding coverage ratio of
1.5:1 for the initial tranche, and 1.3:1 for the second tranche; and
    
    a minimum loan life NPV to loans outstanding coverage ratio of 1.3:1 for the initial
tranche, and 1.2:1 for the second tranche.
  84




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements  ( )
  Convertible Bonds
     85




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements  ( )
 Subordinated Notes
   Note
10  Other Liabilities
  December 31,2009
    
    2008Asset retirement obligations
    
    $
    47,362
    
    
    $
    38,776Long-term derivative liabilities
    
    
    38,050
    
    
    
    17,015Total Other Liabilities
    
    $
    85,412
    
    
    $
    55,791
  86




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements  ( )
 Year EndedDecember 31,2009
    
    2008Carrying amount of asset retirement obligations as of beginning of
period
    
    $
    38,776
    
    
    $
    30,790Increase (decrease) due to revised estimates of asset retirement
obligations
    
    
    7,762
    
    
    
    13,840Accretion expense
    
    
    4,117
    
    
    
    2,795Impact of foreign currency exchange rate changes
    
    
    4,280
    
    
    
    (8,649
    )Payment of asset retirement obligation
    
    
    (7,325
    )
    
    
    Sale of assets
    
    
    (248
    )
    
    
    Carrying amount of asset retirement obligations as of end of period
    
    $
    47,362
    
    
    $
    38,776
 Note
11  Equity
  87




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements  ( )
 Year Ended December 31,2009
    
    2008
    
    2007Common Stock:Outstanding at the beginning of the year
    
    
    128,572
    
    
    
    127,006
    
    
    
    118,577Issuance of common stock to pay preferred dividends
    
    
    
    
    
    
    
    
    
    
    6,403Exercise of stock options
    
    
    164
    
    
    
    
    
    
    
    Issuance of stock based compensation
    
    
    2,882
    
    
    
    1,566
    
    
    
    2,026Outstanding at the end of the year
    
    
    131,618
    
    
    
    128,572
    
    
    
    127,006Series B Preferred Stock:Outstanding at the end of the year
    
    
    20
    
    
    
    20
    
    
    
    20Convertible Preferred Stock:Outstanding at the beginning of the year
    
    
    125
    
    
    
    125
    
    
    
    Redemptions
    
    
    (75
    )Issuance of preferred stock
    
    
    
    
    
    
    
    
    
    
    125Outstanding at the end of the year
    
    
    50
    
    
    
    125
    
    
    
    125Treasury Stock:Outstanding at the beginning of the year
    
    
    (327
    )
    
    
    
    
    
    
    Purchase of treasury shares for stock vesting
    
    
    (171
    )
    
    
    (327
    )
    
    
    Outstanding at the end of the year
    
    
    (498
    )
    
    
    (327
    )
    
    
    
 Common Stock
   88




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements  ( )
 Convertible Preferred Stock
       89




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements  ( )
     Series B Preferred Stock
  90




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements  ( )
  Note
12  Income Taxes
  91




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements  ( )
 Total
    
    DiscontinuedContinuing
    
    Operations -(Amounts in thousands)
    
    U.K.
    
    U.S.
    
    Other
    
    Operations
    
    Norway
    
    TotalYear Ended December 31, 2009:Net income (loss) before taxes
    
    $
    (52,041
    )
    
    $
    (31,167
    )
    
    $
    (11,479
    )
    
    $
    (94,687
    )
    
    $
    51,963
    
    
    $
    (42,724
    )Current tax (benefit) expense
    
    
    (5,739
    )
    
    
    40
    
    
    
    (26
    )
    
    
    (5,725
    )
    
    
    (603
    )
    
    
    (6,328
    )Deferred tax (benefit) expense
    
    
    (20,260
    )
    
    
    (20
    )
    
    
    (35
    )
    
    
    (20,315
    )
    
    
    4,791
    
    
    
    (15,524
    )Foreign currency losses on
deferred tax liabilities
    
    
    18,882
    
    
    
    
    
    
    
    
    
    
    
    18,882
    
    
    
    1,241
    
    
    
    20,123Total tax (benefit) expense
    
    
    (7,117
    )
    
    
    20
    
    
    
    (61
    )
    
    
    (7,158
    )
    
    
    5,429
    
    
    
    (1,729
    )Net income (loss) after taxes
    
    $
    (44,924
    )
    
    $
    (31,187
    )
    
    $
    (11,418
    )
    
    $
    (87,529
    )
    
    $
    46,534
    
    
    $
    (40,995
    )Year Ended December 31, 2008:Net income (loss) before taxes
    
    $
    66,129
    
    
    $
    (11,969
    )
    
    $
    (4,185
    )
    
    $
    49,975
    
    
    $
    63,244
    
    
    $
    113,219Current tax expense
    
    
    11,158
    
    
    
    
    
    
    
    10
    
    
    
    11,168
    
    
    
    27,879
    
    
    
    39,047Deferred tax expense
    
    
    22,673
    
    
    
    
    
    
    
    303
    
    
    
    22,976
    
    
    
    15,415
    
    
    
    38,391Foreign currency gains on
deferred tax liabilities
    
    
    (10,028
    )
    
    
    
    
    
    
    
    
    
    
    (10,028
    )
    
    
    (10,681
    )
    
    
    (20,709
    )Total tax expense
    
    
    23,803
    
    
    
    
    
    
    
    313
    
    
    
    24,116
    
    
    
    32,613
    
    
    
    56,729Net income (loss) after taxes
    
    $
    42,326
    
    
    $
    (11,969
    )
    
    $
    (4,498
    )
    
    $
    25,859
    
    
    $
    30,631
    
    
    $
    56,490Year Ended December 31, 2007:Net income (loss) before taxes
    
    $
    (68,704
    )
    
    $
    (10,233
    )
    
    $
    6,584
    
    
    $
    (72,353
    )
    
    $
    14,095
    
    
    $
    (58,258
    )Current tax (benefit) expense
    
    
    2,898
    
    
    
    (3
    )
    
    
    289
    
    
    
    3,184
    
    
    
    562
    
    
    
    3,746Deferred tax (benefit) expense
    
    
    (27,430
    )
    
    
    
    
    
    
    711
    
    
    
    (26,719
    )
    
    
    8,951
    
    
    
    (17,768
    )Foreign currency losses on
deferred tax liabilities
    
    
    1,327
    
    
    
    
    
    
    
    
    
    
    
    1,327
    
    
    
    3,514
    
    
    
    4,841Total tax (benefit) expense
    
    
    (23,205
    )
    
    
    (3
    )
    
    
    1,000
    
    
    
    (22,208
    )
    
    
    13,027
    
    
    
    (9,181
    )Net income (loss) after taxes
    
    $
    (45,499
    )
    
    $
    (10,230
    )
    
    $
    5,584
    
    
    $
    (50,145
    )
    
    $
    1,068
    
    
    $
    (49,077
    )
  92




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
 Year Ended December 31,2009
    
    2008
    
    2007Federal income tax expense (benefit) at statutory rate
    
    $
    (33,141
    )
    
    $
    17,491
    
    
    $
    (25,323
    )Taxation of foreign operations
    
    
    1,572
    
    
    
    12,464
    
    
    
    (1,790
    )Change in
valuation allowance  US
    
    
    10,464
    
    
    
    4,150
    
    
    
    3,515Foreign tax
benefit from foreign currency tax law change
    
    
    (5,400
    )
    
    
    
    
    
    
    Foreign currency (gain)/loss on deferred taxes
    
    
    18,882
    
    
    
    (10,028
    )
    
    
    1,327Other
    
    
    465
    
    
    
    39
    
    
    
    63Income Tax Expense, continuing operations
    
    
    (7,158
    )
    
    
    24,116
    
    
    
    (22,208
    )Discontinued operations  Norway
    
    
    5,429
    
    
    
    32,613
    
    
    
    13,207Total Income Tax Expense
    
    $
    (1,729
    )
    
    $
    56,729
    
    
    $
    (9,001
    )Effective Income Tax Rate
    
    
    8
    %
    
    
    45
    %
    
    
    (32
    )%
   93




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
 2009
    
    2008Deferred tax asset:Deferred compensation
    
    $
    6,236
    
    
    $
    5,771Unrealized loss on derivative instruments
    
    
    16,560
    
    
    
    4,506Asset retirement obligation
    
    
    7,026
    
    
    
    5,244Net operating loss and capital loss carryforward
    
    
    34,635
    
    
    
    21,633Other
    
    
    621
    
    
    
    621Total deferred tax assets
    
    
    65,078
    
    
    
    37,775Less valuation allowance
    
    
    (38,771
    )
    
    
    (23,701
    )Total deferred tax assets after valuation allowance
    
    
    26,307
    
    
    
    14,074Deferred tax liability:Property, plant and equipment
    
    
    (97,111
    )
    
    
    (67,810
    )Unrealized gain on derivative instruments
    
    
    
    
    
    
    (23,628
    )Petroleum revenue tax, net of tax benefit
    
    
    (1,264
    )
    
    
    (1,642
    )Debt discount
    
    
    (2,330
    )
    
    
    (3,267
    )Other
    
    
    (6,294
    )
    
    
    (850
    )Total deferred tax liabilities
    
    
    (106,999
    )
    
    
    (97,197
    )Net deferred tax liability
    
    $
    (80,692
    )
    
    $
    (83,123
    )
  Years of
    
    CarryforwardTypes of Carryforward
    
    Expiration
    
    AmountsU.S.  Net operating loss
    
    
    2022  2029
    
    
    $
    77,630U.K.  Corporate tax net operating loss
    
    Indefinite
    
    
    24,570
   94




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
      Note
13  Stock-Based Compensation Arrangements
   95




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
 Fourth Quarter
    
    Year EndedDecember 31,
    
    December 31,2009
    
    2008
    
    2009
    
    2008G & A Expenses
    
    $
    705
    
    
    $
    723
    
    
    $
    2,786
    
    
    $
    2,641Capitalized G & A
    
    
    227
    
    
    
    299
    
    
    
    573
    
    
    
    901Total non-cash
stock-based
compensation
    
    $
    932
    
    
    $
    1,022
    
    
    $
    3,359
    
    
    $
    3,542
 Stock-Based Compensation Arrangements
    For the Year Ended December 31,2009
    
    2008
    
    2007Risk-free rate
    
    
    1.5
    %
    
    
    3.1
    %
    
    
    4.4
    %Expected years until exercise
    
    
    4.25
    
    
    
    4.00
    
    
    
    4.00Expected stock volatility
    
    
    56
    %
    
    
    46
    %
    
    
    45
    %Dividend yield
    
    
    
    
    
    
    
    
    
    
    
 96




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
  Stock Options
  Weighted
    
    WeightedNumber of
    
    Average
    
    AverageShares
    
    Exercise
    
    Contractual
    
    AggregateUnderlying
    
    Price per
    
    Life in
    
    IntrinsicOptions
    
    Share
    
    Years
    
    ValueBalance outstanding January 1, 2009
    
    
    4,807
    
    
    $
    2.35Granted
    
    
    1,181
    
    
    
    0.54Exercised
    
    
    (164
    )
    
    
    0.81Forfeited
    
    
    (680
    )
    
    
    3.39Expired
    
    
    (932
    )
    
    
    2.09Balance outstanding   December
31, 2009
    
    
    4,212
    
    
    $
    1.87
    
    
    
    6.2
    
    
    $
    665Currently exercisable  December
31, 2009
    
    
    2,124
    
    
    $
    2.79
    
    
    
    4.1
    
    
    $
    42
    97




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
 Options Outstanding
    
    Options ExercisableWeighted
    
    Weighted
    
    
    
    
    
    WeightedAverage
    
    Average
    
    
    
    
    
    AverageNumber of
    
    Remaining
    
    Exercise
    
    
    
    
    
    ExerciseRange of Exercise
    
    Options
    
    Contractual
    
    Price Per
    
    Number
    
    Price PerPrices
    
    Outstanding
    
    Life
    
    Share
    
    Exercisable
    
    ShareLess than $1.00
    
    
    1,329
    
    
    
    9.00
    
    
    $
    0.58
    
    
    
    123
    
    
    $
    0.74$1.00  $2.00
    
    
    1,597
    
    
    
    7.84
    
    
    
    1.48
    
    
    
    741
    
    
    
    1.54$2.00  $3.00
    
    
    265
    
    
    
    3.88
    
    
    
    2.44
    
    
    
    238
    
    
    
    2.48$3.00  $4.00
    
    
    386
    
    
    
    0.86
    
    
    
    3.57
    
    
    
    386
    
    
    
    3.57Greater than $4.00
    
    
    635
    
    
    
    0.79
    
    
    
    4.28
    
    
    
    635
    
    
    
    4.28Total
    
    
    4,212
    
    
    
    6.25
    
    
    $
    1.87
    
    
    
    2,123
    
    
    $
    2.79
  Restricted Stock
   98




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
 WeightedAverage GrantDate FairNumber of
    
    Value perShares
    
    ShareBalance outstanding  January 1, 2009
    
    
    3,966
    
    
    $
    1.88Granted
    
    
    2,545
    
    
    
    0.72Vested
    
    
    (2,917
    )
    
    
    1.92Forfeited
    
    
    (174
    )
    
    
    1.46Balance outstanding  December 31, 2009
    
    
    3,420
    
    
    $
    1.00Total grant date fair value of shares vesting during the period
    
    $
    5,594
 Note
14  Earnings per Share
  Year Ended December 31,2009
    
    2008
    
    2007Net income (loss) to common shareholdersBasic
    
    $
    (62,206
    )
    
    $
    45,681
    
    
    $
    (60,315
    )Add Effect of:Preferred dividends
    
    
    
    
    
    
    10,625
    
    
    
    Diluted
    
    $
    (62,206
    )
    
    $
    56,306
    
    
    $
    (60,315
    )Weighted Average Number of Common
Shares Outstanding:Basic
    
    
    130,291
    
    
    
    128,312
    
    
    
    123,118Add Effect of:Preferred stock
    
    
    
    
    
    
    50,000
    
    
    
    Diluted
    
    
    130,291
    
    
    
    178,312
    
    
    
    123,118
  99




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
 December 31,2009
    
    2008
    
    2007Options and stock-based compensation
    
    
    1,910
    
    
    
    2
    
    
    
    Convertible debt
    
    
    37,303
    
    
    
    32,725
    
    
    
    16,185Convertible preferred stock
    
    
    40,000
    
    
    
    
    
    
    
    50,000Common shares potentially issuable
    
    
    79,213
    
    
    
    32,727
    
    
    
    66,185
 Note
15  Comprehensive Income (Loss)
  Year Ended December 31,2009
    
    2008
    
    2007Net income (loss)
    
    $
    (40,995
    )
    
    $
    56,490
    
    
    $
    (49,077
    )Related to derivative instruments:Unrealized gain (loss)
    
    
    
    
    
    
    428
    
    
    
    (852
    )Reclassification adjustment for gain (loss) realized in
net income (loss) above
    
    
    1,194
    
    
    
    (770
    )
    
    
    Related to marketable securities:Unrealized loss
    
    
    
    
    
    
    (1
    )
    
    
    (71
    )Reclassification adjustment for loss realized in net
income (loss) above
    
    
    72
    
    
    
    
    
    
    
    Net impact on comprehensive income (loss)
    
    
    1,266
    
    
    
    (343
    )
    
    
    (923
    )Comprehensive income (loss)
    
    $
    (39,729
    )
    
    $
    56,147
    
    
    $
    (50,000
    )
  100




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Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
 Year Ended December 31,2009
    
    2008
    
    2007Related to derivative instruments:Balance at beginning of year
    
    $
    (1,194
    )
    
    $
    (852
    )
    
    $
    Change during the year
    
    
    1,194
    
    
    
    (342
    )
    
    
    (852
    )Balance at end of year
    
    
    
    
    
    
    (1,194
    )
    
    
    (852
    )Related to marketable securities:Balance at beginning of year
    
    
    (72
    )
    
    
    (71
    )
    
    
    Change during the year
    
    
    72
    
    
    
    (1
    )
    
    
    (71
    )Balance at end of year
    
    
    
    
    
    
    (72
    )
    
    
    (71
    )Accumulated other comprehensive loss
    
    $
    
    
    
    $
    (1,266
    )
    
    $
    (923
    )
 Note
16  Financial Instruments
 December 31, 2009
    
    December 31, 2008Fair
    
    Carrying
    
    
    
    
    
    CarryingValue
    
    Value
    
    Fair Value
    
    ValueAssets:Derivative instruments
    
    $
    3,208
    
    
    $
    3,208
    
    
    $
    33,351
    
    
    $
    33,351Liabilities:Long-term debt
    
    
    219,959
    
    
    
    223,385
    
    
    
    190,681
    
    
    
    214,855Derivative instruments
    
    
    (44,866
    )
    
    
    (44,866
    )
    
    
    (18,208
    )
    
    
    (18,208
    )
  101




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
 Note
17  Fair Value Measurements
  Level 1:
    
    Fair value is based on actively-quoted market prices, if available.Level 2:
    
    In the absence of actively-quoted market prices, we seek price information from external sources, including broker
quotes and industry publications. Substantially all of these inputs are observable in the marketplace during the
entire term of the instrument, can be derived from observable data, or supported by observable levels at which
transactions are executed in the marketplace.Level 3:
    
    If valuations require inputs that are both significant to the fair value measurement and less observable from
objective sources, we must estimate prices based on available historical and near-term future price information and
certain statistical methods that reflect our market assumptions.
   102




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
 Quoted Market Prices
    
    Significant Other
    
    Significantin Active Markets -
    
    Observable Inputs -
    
    Unobservable Inputs -
    
    TotalLevel 1
    
    Level 2
    
    Level 3
    
    Fair ValueOil and gas derivative contracts:Oil and gas swaps
    
    $
    
    
    
    $
    (12,816
    )
    
    $
    
    
    
    $
    (12,816
    )Embedded derivatives
    
    
    
    
    
    
    
    
    
    
    (28,843
    )
    
    
    (28,843
    )Total derivative liabilities
    
    $
    
    
    
    $
    (12,816
    )
    
    $
    (28,843
    )
    
    $
    (41,659
    )
   Year EndedDecember 31,2009Balance at beginning of period
    
    $
    (12,057
    )Total gains or losses (realized/unrealized)Included in earnings
    
    
    (14,390
    )Purchases, issuance and settlements
    
    
    (2,396
    )Balance at end of period
    
    $
    (28,843
    )Changes in unrealized gains (losses) relating to derivatives assets and liabilities still held at
December 31, 2009
    
    $
    (9,713
    )
 Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
  103




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
 Goodwill 
  Note
18  Derivative Instruments
  104




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
 December 31,
    
    December 31,2009
    
    2008Derivatives not designated as hedges:Oil and gas commodity derivatives:Assets:Prepaid expenses and other current assets
    
    $
    2,890
    
    
    $
    31,649Other assets  long term
    
    
    318
    
    
    
    1,702Liabilities:Accrued expenses and other
    
    
    (6,817
    )
    
    
    Other liabilities  long-term
    
    
    (9,207
    )
    
    
    (2,375
    )$
    (12,816
    )
    
    $
    30,976Embedded derivatives related to debt instrument:Liabilities:Other liabilities  long-term
    
    
    (28,843
    )
    
    
    (14,640
    )Derivatives designated as cash flow hedge:Interest rate swapLiabilities:Accrued expenses and other
    
    
    
    
    
    
    (1,334
    )
   Year Ended December 31,2009
    
    2008
    
    2007Derivatives not designated as hedges:Oil and gas commodity derivativesRealized gains (losses)
    
    $
    35,422
    
    
    $
    (28,578
    )
    
    $
    12,048Unrealized gains (losses)
    
    
    (43,791
    )
    
    
    77,846
    
    
    
    (89,132
    )(8,369
    )
    
    
    49,268
    
    
    
    (77,084
    )Embedded derivatives related to debt instrumentUnrealized gains (losses)
    
    $
    (11,807
    )
    
    $
    (1,180
    )
    
    $
    
  105




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
 Year Ended December 31,Location ofReclassificationinto Income
    
    2009
    
    2008
    
    2007Interest rate swap(Gain) loss recognized in other
comprehensive
income, net of tax
    
    
    
    
    
    $
    
    
    
    $
    428
    
    
    $
    (852
    )(Gain) loss reclassified from
accumulated other
comprehensive
income into income
    
    Interest expense
    
    
    1,194
    
    
    
    (770
    )
    
    
    
    Note
19  Supplementary Cash Flow Disclosures
  Year Ended December 31,2009
    
    2008
    
    2007Interest paid
    
    $
    7,074
    
    
    $
    15,966
    
    
    $
    22,164Income taxes paid
    
    $
    4,738
    
    
    $
    20,088
    
    
    $
    7,662
 Non-Cash Investing and Financing Transactions
  106




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
   Note
20  Commitments and Contingencies
 General
  Operating Leases
  Rig Commitments
  Participation Agreement
  107




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
  Contingencies
  Note
21  Segment and Geographic Information
  2009
    
    2008
    
    2007Long-
    
    
    
    
    
    Long
    
    
    
    
    
    Longlived
    
    
    
    
    
    lived
    
    
    
    
    
    livedRevenue
    
    Assets
    
    Revenue
    
    Assets
    
    Revenue
    
    AssetsUnited States
    
    $
    1,627
    
    
    $
    46,172
    
    
    $
    
    
    
    $
    12,125
    
    
    $
    
    
    
    $
    6,920United Kingdom
    
    
    60,666
    
    
    
    436,016
    
    
    
    170,782
    
    
    
    441,195
    
    
    
    135,876
    
    
    
    488,377Other
    
    
    
    
    
    
    1,607
    
    
    
    
    
    
    
    2,140
    
    
    
    
    
    
    
    4,386Continuing Operations
    
    
    62,293
    
    
    
    483,795
    
    
    
    170,782
    
    
    
    455,460
    
    
    
    135,876
    
    
    
    499,683Discontinued
operations 
Norway
    
    
    17,550
    
    
    
    
    
    
    
    89,660
    
    
    
    148,605
    
    
    
    40,188
    
    
    
    129,693Total
    
    $
    79,843
    
    
    $
    483,795
    
    
    $
    260,442
    
    
    $
    604,065
    
    
    $
    176,064
    
    
    $
    629,376Total International
    
    $
    78,216
    
    
    $
    437,623
    
    
    $
    260,442
    
    
    $
    583,943
    
    
    $
    176,064
    
    
    $
    622,456
 108




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
 Note 22  Quarterly Financial Data (Unaudited)
 Second
    
    Third
    
    FourthFirst Quarter
    
    Quarter
    
    Quarter
    
    Quarter2009Revenues from continuing operations
    
    $
    16,338
    
    
    $
    18,082
    
    
    $
    7,759
    
    
    $
    20,113Operating expenses from continuing operations
    
    
    50,743
    
    
    
    17,614
    
    
    
    13,613
    
    
    
    30,722Operating profit (loss) from continuing operations
    
    
    (34,405
    )
    
    
    468
    
    
    
    (5,854
    )
    
    
    (10,609
    )Net income (loss) to common stockholders
    
    
    (19,532
    )
    
    
    7,124
    
    
    
    (7,179
    )
    
    
    (42,618
    )Net loss
from continuing operations per common shareBasic
    
    
    (0.15
    )
    
    
    (0.31
    )
    
    
    (0.06
    )
    
    
    (0.33
    )Diluted
    
    
    (0.15
    )
    
    
    (0.31
    )
    
    
    (0.06
    )
    
    
    (0.33
    )Net income (loss)
from discontinued operations per common shareBasic
    
    
    
    
    
    
    0.36
    
    
    
    
    
    
    
    Diluted
    
    
    
    
    
    
    0.36
    
    
    
    
    
    
    
    2008Revenues from continuing operations
    
    $
    45,809
    
    
    $
    55,343
    
    
    $
    44,160
    
    
    $
    25,469Operating expenses from continuing operations
    
    
    29,944
    
    
    
    32,528
    
    
    
    26,074
    
    
    
    63,999Operating profit (loss) from continuing operations
    
    
    15,865
    
    
    
    22,815
    
    
    
    18,086
    
    
    
    (38,530
    )Net income (loss) to common stockholders
    
    
    (19,487
    )
    
    
    (66,733
    )
    
    
    75,487
    
    
    
    56,414Net income (loss) from
continuing operations per common shareBasic
    
    
    (0.15
    )
    
    
    (0.56
    )
    
    
    0.48
    
    
    
    0.35Diluted
    
    
    (0.15
    )
    
    
    (0.56
    )
    
    
    0.29
    
    
    
    0.24Net income (loss) from
discontinued operations per common shareBasic
    
    
    (0.15
    )
    
    
    0.04
    
    
    
    0.11
    
    
    
    0.09Diluted
    
    
    (0.15
    )
    
    
    0.04
    
    
    
    0.07
    
    
    
    0.05
 109




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
 Note
23  Subsequent Events
 Asset Acquisitions
    Series C Convertible Preferred Stock
   Common Stock Issuance
  110




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
  Junior Facility
   Senior Bank Facility
  2011 Debt Maturities
  111




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
 Strategic Alternatives for North Sea Assets
  
    
    Continuing to execute current operations plan;
    
    Entering into a joint venture to accelerate activities in the North Sea; and
    
    Selling specific assets or the North Sea entire business.
  112




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
 Note 24  Supplemental Oil and Gas Disclosures (Unaudited)
 Capitalized
Costs Relating to Oil and Gas Producing Activities
 Total
    
    DiscontinuedUnited
    
    United
    
    
    
    
    
    Continuing
    
    OperationsKingdom
    
    States
    
    Other
    
    Operations
    
    Norway (1)
    
    TotalDecember 31, 2009:Proved
    
    $
    266,893
    
    
    $
    8,385
    
    
    $
    
    
    
    $
    275,278
    
    
    $
    
    
    
    $
    275,278Unproved
    
    
    125,996
    
    
    
    26,817
    
    
    
    1,740
    
    
    
    154,553
    
    
    
    
    
    
    
    154,553Total capitalized costs
    
    
    392,889
    
    
    
    35,202
    
    
    
    1,740
    
    
    
    429,831
    
    
    
    
    
    
    
    429,831Accumulated depreciation,
depletion and
amortization
    
    
    (164,703
    )
    
    
    (810
    )
    
    
    
    
    
    
    (165,513
    )
    
    
    
    
    
    
    (165,513
    )Net capitalized costs
    
    $
    228,186
    
    
    $
    34,392
    
    
    $
    1,740
    
    
    $
    264,318
    
    
    $
    
    
    
    $
    264,318December 31, 2008:Proved
    
    $
    232,730
    
    
    $
    629
    
    
    $
    9
    
    
    $
    233,368
    
    
    $
    65,522
    
    
    $
    298,890Unproved
    
    
    131,688
    
    
    
    5,876
    
    
    
    2,132
    
    
    
    139,696
    
    
    
    48,714
    
    
    
    188,410Total capitalized costs
    
    
    364,418
    
    
    
    6,505
    
    
    
    2,141
    
    
    
    373,064
    
    
    
    114,236
    
    
    
    487,300Accumulated depreciation,
depletion and
amortization
    
    
    (142,686
    )
    
    
    
    
    
    
    
    
    
    
    (142,686
    )
    
    
    (33,914
    )
    
    
    (176,600
    )Net capitalized costs
    
    $
    221,732
    
    
    $
    6,505
    
    
    $
    2,141
    
    
    $
    230,378
    
    
    $
    80,322
    
    
    $
    310,700
 113




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
 Costs Incurred in Oil and Gas Property Acquisition, Exploration and Development Activities
 Total
    
    DiscontinuedUnited
    
    United
    
    
    
    
    
    Continuing
    
    OperationsKingdom
    
    States
    
    Other
    
    Operations
    
    Norway (1)
    
    TotalYear Ended December
31, 2009:Acquisition costs:Proved
    
    $
    7,589
    
    
    $
    8,999
    
    
    $
    
    
    
    $
    16,588
    
    
    $
    
    
    
    $
    16,588Proved
    
    
    1,450
    
    
    
    14,091
    
    
    
    23
    
    
    
    15,564
    
    
    
    
    
    
    
    15,564Exploration costs
    
    
    49,937
    
    
    
    17,757
    
    
    
    (382
    )
    
    
    67,312
    
    
    
    4,776
    
    
    
    72,088Development costs
    
    
    11,443
    
    
    
    
    
    
    
    
    
    
    
    11,443
    
    
    
    5,067
    
    
    
    16,510Total costs incurred
    
    $
    70,419
    
    
    $
    40,847
    
    
    $
    (359
    )
    
    $
    110,907
    
    
    $
    9,843
    
    
    $
    120,750Year Ended December
31, 2008:Acquisition costs:Proved
    
    
    1,178
    
    
    
    971
    
    
    
    27
    
    
    
    2,176
    
    
    
    
    
    
    
    2,176Exploration costs
    
    
    34,641
    
    
    
    5,515
    
    
    
    (62
    )
    
    
    40,094
    
    
    
    22,796
    
    
    
    62,890Development costs
    
    
    16,752
    
    
    
    19
    
    
    
    
    
    
    
    16,771
    
    
    
    8,808
    
    
    
    25,579Total costs incurred
    
    $
    52,571
    
    
    $
    6,505
    
    
    $
    (35
    )
    
    $
    59,041
    
    
    $
    31,604
    
    
    $
    90,645Year Ended December
31, 2007:Acquisition costs:Proved
    
    
    774
    
    
    
    
    
    
    
    18
    
    
    
    792
    
    
    
    
    
    
    
    792Exploration costs
    
    
    54,916
    
    
    
    
    
    
    
    268
    
    
    
    55,184
    
    
    
    10,392
    
    
    
    65,576Development costs
    
    
    7,562
    
    
    
    
    
    
    
    
    
    
    
    7,562
    
    
    
    14,063
    
    
    
    21,625Total costs incurred
    
    $
    63,252
    
    
    $
    
    
    
    $
    286
    
    
    $
    63,538
    
    
    $
    24,455
    
    
    $
    87,993
 114




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
 Results of Operations for Oil and Gas Producing Activities
 Total
    
    DiscontinuedUnited
    
    United
    
    Continuing
    
    Operations -Kingdom
    
    States
    
    Operations
    
    Norway (1)
    
    TotalYear Ended December 31, 2009:Revenues
    
    $
    60,666
    
    
    $
    1,627
    
    
    $
    62,293
    
    
    $
    17,550
    
    
    $
    79,843Production expenses
    
    
    16,911
    
    
    
    865
    
    
    
    17,776
    
    
    
    5,536
    
    
    
    23,312DD&A
    
    
    31,915
    
    
    
    817
    
    
    
    32,732
    
    
    
    4,595
    
    
    
    37,327Impairment of oil and
gas properties
    
    
    31,332
    
    
    
    12,597
    
    
    
    43,929
    
    
    
    
    
    
    
    43,929Income tax expense
    
    
    (9,746
    )
    
    
    (4,428
    )
    
    
    (14,174
    )
    
    
    5,787
    
    
    
    (8,387
    )Results of activities
    
    $
    (9,746
    )
    
    $
    (8,224
    )
    
    $
    (17,970
    )
    
    $
    1,632
    
    
    $
    (16,338
    )Year Ended December 31, 2008:Revenues
    
    $
    170,781
    
    
    $
    
    
    
    $
    170,781
    
    
    $
    89,660
    
    
    $
    260,441Production expenses
    
    
    31,489
    
    
    
    828
    
    
    
    32,317
    
    
    
    14,259
    
    
    
    46,576DD&A
    
    
    65,764
    
    
    
    
    
    
    
    65,764
    
    
    
    14,078
    
    
    
    79,842Impairment of oil and
gas properties
    
    
    36,970
    
    
    
    
    
    
    
    36,970
    
    
    
    
    
    
    
    36,970Income tax expense
    
    
    18,279
    
    
    
    (290
    )
    
    
    17,989
    
    
    
    47,832
    
    
    
    65,821Results of activities
    
    $
    18,279
    
    
    $
    (538
    )
    
    $
    17,741
    
    
    $
    13,491
    
    
    $
    31,232Year Ended December 31, 2007:Revenues
    
    $
    135,876
    
    
    $
    
    
    
    $
    135,876
    
    
    $
    40,188
    
    
    $
    176,064Production expenses
    
    
    27,263
    
    
    
    
    
    
    
    27,263
    
    
    
    13,781
    
    
    
    41,044DD&A
    
    
    67,338
    
    
    
    
    
    
    
    67,338
    
    
    
    7,722
    
    
    
    75,060Income tax expense
    
    
    20,638
    
    
    
    
    
    
    
    20,638
    
    
    
    14,574
    
    
    
    35,212Results of activities
    
    $
    20,637
    
    
    
    
    
    
    $
    20,637
    
    
    $
    4,111
    
    
    $
    24,748
 (1)
    
    We completed the divestiture of our Norwegian subsidiary on May 14,
2009. The results of operations and financial position of this subsidiary are classified
as discontinued operations for all periods presented.
 Oil and Gas Reserves
  115




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
   116




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
 Total
    
    DiscontinuedUnited
    
    United
    
    Continuing
    
    Operations -Kingdom
    
    States
    
    Operations
    
    Norway (1)
    
    TotalProved Oil Reserves (MBbls):Proved reserves at January 1, 2006
    
    
    4,566
    
    
    
    
    
    
    
    4,566
    
    
    
    1,186
    
    
    
    5,752Production
    
    
    (1,274
    )
    
    
    
    
    
    
    (1,274
    )
    
    
    (519
    )
    
    
    (1,793
    )Extensions and discoveries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    340
    
    
    
    340Revisions of previous estimates
    
    
    (8
    )
    
    
    
    
    
    
    (8
    )
    
    
    1,049
    
    
    
    1,041Proved reserves at December 31, 2007
    
    
    3,284
    
    
    
    
    
    
    
    3,284
    
    
    
    2,056
    
    
    
    5,340Production
    
    
    (1,032
    )
    
    
    
    
    
    
    (1,032
    )
    
    
    (726
    )
    
    
    (1,758
    )Extensions and discoveries
    
    
    522
    
    
    
    18
    
    
    
    540
    
    
    
    121
    
    
    
    661Revisions of previous estimates
    
    
    (643
    )
    
    
    
    
    
    
    (643
    )
    
    
    (45
    )
    
    
    (688
    )Proved reserves at December 31, 2008
    
    
    2,131
    
    
    
    18
    
    
    
    2,149
    
    
    
    1,406
    
    
    
    3,555Production
    
    
    (690
    )
    
    
    (4
    )
    
    
    (694
    )
    
    
    (310
    )
    
    
    (1,004
    )Purchases of reserves
    
    
    
    
    
    
    2
    
    
    
    2
    
    
    
    
    
    
    
    2Sales of reserves in place
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,107
    )
    
    
    (1,107
    )Extensions and discoveries
    
    
    1,209
    
    
    
    3
    
    
    
    1,212
    
    
    
    
    
    
    
    1,212Revisions of previous estimates
    
    
    698
    
    
    
    (1
    )
    
    
    697
    
    
    
    11
    
    
    
    708Proved reserves at December 31, 2009
    
    
    3,348
    
    
    
    18
    
    
    
    3,366
    
    
    
    
    
    
    
    3,366Proved Developed Oil Reserves (MBbls):At December 31, 2007
    
    
    2,544
    
    
    
    
    
    
    
    2,544
    
    
    
    1,650
    
    
    
    4,194At December 31, 2008
    
    
    1,468
    
    
    
    7
    
    
    
    1,475
    
    
    
    1,302
    
    
    
    2,777At December 31, 2009
    
    
    1,381
    
    
    
    8
    
    
    
    1,389
    
    
    
    
    
    
    
    1,389
 117




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Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
 Total
    
    DiscontinuedUnited
    
    United
    
    Continuing
    
    Operations -Kingdom
    
    States
    
    Operations
    
    Norway (1)
    
    TotalProved Gas Reserves (MMcf):Proved reserves at January 1, 2006
    
    
    17,172
    
    
    
    
    
    
    
    17,172
    
    
    
    7,673
    
    
    
    24,845Production
    
    
    (8,556
    )
    
    
    
    
    
    
    (8,556
    )
    
    
    (328
    )
    
    
    (8,884
    )Extensions and discoveries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,821
    
    
    
    1,821Revisions of previous estimates
    
    
    3,196
    
    
    
    
    
    
    
    3,196
    
    
    
    (732
    )
    
    
    2,464Proved reserves at December 31, 2007
    
    
    11,812
    
    
    
    
    
    
    
    11,812
    
    
    
    8,434
    
    
    
    20,246Production
    
    
    (6,532
    )
    
    
    
    
    
    
    (6,532
    )
    
    
    (2,322
    )
    
    
    (8,854
    )Extensions and discoveries
    
    
    20,370
    
    
    
    690
    
    
    
    21,060
    
    
    
    52
    
    
    
    21,112Revisions of previous estimates
    
    
    1,480
    
    
    
    
    
    
    
    1,480
    
    
    
    (1,187
    )
    
    
    293Proved reserves at December 31, 2008
    
    
    27,130
    
    
    
    690
    
    
    
    27,820
    
    
    
    4,977
    
    
    
    32,797Production
    
    
    (3,743
    )
    
    
    (320
    )
    
    
    (4,063
    )
    
    
    (686
    )
    
    
    (4,749
    )Purchases of reserves
    
    
    
    
    
    
    10,037
    
    
    
    10,037
    
    
    
    
    
    
    
    10,037Sales of reserves in place
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,241
    )
    
    
    (4,241
    )Extensions and discoveries
    
    
    52,895
    
    
    
    6
    
    
    
    52,901
    
    
    
    
    
    
    
    52,901Revisions of previous estimates
    
    
    2,034
    
    
    
    371
    
    
    
    2,405
    
    
    
    (50
    )
    
    
    2,355Proved reserves at December 31, 2009
    
    
    78,316
    
    
    
    10,784
    
    
    
    89,100
    
    
    
    
    
    
    
    89,100Proved Developed Gas Reserves (MMcf):At December 31, 2007
    
    
    8,416
    
    
    
    
    
    
    
    8,416
    
    
    
    6,614
    
    
    
    15,030At December 31, 2008
    
    
    6,761
    
    
    
    234
    
    
    
    6,995
    
    
    
    4,917
    
    
    
    11,912At December 31, 2009
    
    
    4,329
    
    
    
    4,707
    
    
    
    9,036
    
    
    
    
    
    
    
    9,036
 118




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
 Total
    
    DiscontinuedUnited
    
    United
    
    Continuing
    
    Operations -Kingdom
    
    States
    
    Operations
    
    Norway
    
    TotalProved Reserves (MBOE):Proved reserves at January 1, 2007
    
    
    7,428
    
    
    
    
    
    
    
    7,428
    
    
    
    2,465
    
    
    
    9,893Extensions and discoveries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    643
    
    
    
    643Production
    
    
    (2,700
    )
    
    
    
    
    
    
    (2,700
    )
    
    
    (574
    )
    
    
    (3,274
    )Revisions of previous estimates
    
    
    524
    
    
    
    
    
    
    
    524
    
    
    
    927
    
    
    
    1,451Proved reserves at December 31, 2007
    
    
    5,252
    
    
    
    
    
    
    
    5,252
    
    
    
    3,461
    
    
    
    8,713Production
    
    
    (2,121
    )
    
    
    
    
    
    
    (2,121
    )
    
    
    (1,113
    )
    
    
    (3,234
    )Extensions and discoveries
    
    
    3,917
    
    
    
    133
    
    
    
    4,050
    
    
    
    130
    
    
    
    4,180Revisions of previous estimates
    
    
    (395
    )
    
    
    
    
    
    
    (395
    )
    
    
    (242
    )
    
    
    (637
    )Proved reserves at December 31, 2008
    
    
    6,653
    
    
    
    133
    
    
    
    6,786
    
    
    
    2,236
    
    
    
    9,022Production
    
    
    (1,314
    )
    
    
    (57
    )
    
    
    (1,371
    )
    
    
    (424
    )
    
    
    (1,795
    )Extensions and discoveries
    
    
    10,025
    
    
    
    4
    
    
    
    10,029
    
    
    
    
    
    
    
    10,029Purchae of Reserves
    
    
    
    
    
    
    1,675
    
    
    
    1,675
    
    
    
    
    
    
    
    1,675Sales of Reserves
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,815
    )
    
    
    (1,815
    )Revisions of previous estimates
    
    
    1,037
    
    
    
    60
    
    
    
    1,097
    
    
    
    3
    
    
    
    1,100Proved reserves at December 31, 2009
    
    
    16,401
    
    
    
    1,815
    
    
    
    18,216
    
    
    
    
    
    
    
    18,216Proved Developed Reserves (MBOE):At December 31, 2007
    
    
    3,947
    
    
    
    
    
    
    
    3,947
    
    
    
    2,752
    
    
    
    6,699At December 31, 2008
    
    
    2,595
    
    
    
    46
    
    
    
    2,641
    
    
    
    2,122
    
    
    
    4,763At December 31, 2009
    
    
    2,103
    
    
    
    792
    
    
    
    2,895
    
    
    
    
    
    
    
    2,895
 Standardized Measure of Discounted Future Net Cash Flows
   119




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Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
    120




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
 Standardized Measure of Discounted Future Net Cash Flows
 DiscontinuedUnited
    
    United
    
    Continuing
    
    Operations -Kingdom
    
    States
    
    Operations
    
    Norway
    
    TotalDecember 31, 2009:Future cash inflows
    
    $
    424,007
    
    
    $
    36,799
    
    
    $
    460,806
    
    
    $
    
    
    
    $
    460,806Future production costs
    
    
    (89,696
    )
    
    
    (9,893
    )
    
    
    (99,589
    )
    
    
    
    
    
    
    (99,589
    )Future development costs
    
    
    (274,456
    )
    
    
    (12,602
    )
    
    
    (287,058
    )
    
    
    
    
    
    
    (287,058
    )Future income tax expense
    
    
    (17,433
    )
    
    
    
    
    
    
    (17,433
    )
    
    
    
    
    
    
    (17,433
    )Future net cash flows
(undiscounted)
    
    
    42,422
    
    
    
    14,304
    
    
    
    56,726
    
    
    
    
    
    
    
    56,726Annual discount of 10%
for estimated timing
    
    
    (6,770
    )
    
    
    7,798
    
    
    
    1,028
    
    
    
    
    
    
    
    1,028Standardized measure of
future net cash flows
    
    $
    49,192
    
    
    $
    6,506
    
    
    $
    55,698
    
    
    $
    
    
    
    $
    55,698December 31, 2008:Future cash inflows
    
    $
    306,021
    
    
    $
    4,599
    
    
    $
    310,620
    
    
    $
    88,039
    
    
    $
    398,659Future production costs
    
    
    (71,242
    )
    
    
    (1,005
    )
    
    
    (72,247
    )
    
    
    (25,157
    )
    
    
    (97,404
    )Future development costs
    
    
    (157,984
    )
    
    
    (2,100
    )
    
    
    (160,084
    )
    
    
    (25,579
    )
    
    
    (185,663
    )Future income tax expense
    
    
    (33,977
    )
    
    
    
    
    
    
    (33,977
    )
    
    
    (17,036
    )
    
    
    (51,013
    )Future net cash flows
(undiscounted)
    
    
    42,818
    
    
    
    1,494
    
    
    
    44,312
    
    
    
    20,267
    
    
    
    64,579Annual discount of 10%
for estimated timing
    
    
    12,548
    
    
    
    563
    
    
    
    13,111
    
    
    
    1,806
    
    
    
    14,917Standardized measure of
future net cash flows
    
    $
    30,270
    
    
    $
    931
    
    
    $
    31,201
    
    
    $
    18,461
    
    
    $
    49,662
 121




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
 Principal Sources of Change in the Standardized Measure
of Discounted Future Net Cash Flows
 Year Ended December 31,2009
    
    2008
    
    2007Standardized measure, beginning of period
    
    $
    49,662
    
    
    $
    191,920
    
    
    $
    145,541Net changes in prices and production costs
    
    
    (30,155
    )
    
    
    (144,547
    )
    
    
    199,343Future development costs incurred
    
    
    16,511
    
    
    
    8,912
    
    
    
    21,625Net changes in estimated future development costs
    
    
    (81,864
    )
    
    
    (105,784
    )
    
    
    (48,873
    )Revisions of previous quantity estimates
    
    
    22,318
    
    
    
    (19,381
    )
    
    
    79,636Extensions and discoveries
    
    
    128,090
    
    
    
    127,182
    
    
    
    35,345Accretion of discount
    
    
    8,139
    
    
    
    39,734
    
    
    
    24,078Changes in income taxes, net
    
    
    (1,054
    )
    
    
    163,445
    
    
    
    (135,233
    )Sale of oil and gas produced, net of production costs
    
    
    (56,531
    )
    
    
    (213,865
    )
    
    
    (135,020
    )Purchased reserves
    
    
    8,827
    
    
    
    
    
    
    
    Sales of reserves in place
    
    
    (11,514
    )
    
    
    
    
    
    
    Change in production, timing and other
    
    
    3,269
    
    
    
    2,046
    
    
    
    5,478Standardized measure, end of period
    
    $
    55,698
    
    
    $
    49,662
    
    
    $
    191,920
 122




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##### Table of Contents



Endeavour International Corporation
 
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
  
 Item 9A. Controls and Procedures.
 Evaluation of Disclosure Controls and Procedures
  Managements Report on Internal Control Over Financial Reporting
    123




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##### Table of Contents



Endeavour International Corporation
  Changes in Internal Control over Financial Reporting
  Report of Independent Registered Public Accounting Firm
 
 Internal Control  Integrated Framework
   124




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##### Table of Contents



Endeavour International Corporation
  Internal Control  Integrated Framework
   
 125




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##### Table of Contents



Endeavour International Corporation
 
 Item 9B. Other Information
  
 Item 10. Directors, Executive Officers and Corporate Governance of the Registrant
   
 Item 11. Executive Compensation
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholders Matters
  
 Item 13. Certain Relationships and Related Transactions, and Director Independence
  126




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##### Table of Contents



Endeavour International Corporation
  
 Item 14. Principal Accounting Fees and Services
  
 Part IV
 
 Item 15. Exhibits and Financial Statement Schedules
       127




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Endeavour International Corporation
 
 Signatures
  Endeavour International Corporation
 By:
    
    /s/ J. Michael Kirksey

J. Michael KirkseyExecutive Vice President and Chief Financial Officer
   Signature
    
    Title
    
    Date/s/ William L. Transier

William L. Transier
    
    Chief Executive
Officer, President and
Director (Principal
Executive Officer)
    
    March 16, 2010/s/ J. Michael Kirksey

J. Michael Kirksey
    
    Chief Financial Officer
(Principal Financial
Officer)
    
    March 16, 2010/s/ Robert L. Thompson

Robert L. Thompson
    
    Chief Accounting
Officer (Principal
Accounting Officer)
    
    March 16, 2010/s/ Thomas D. Clark

Thomas D. Clark
    
    Director
    
    March 16, 2010/s/ John B. Connally III

John B. Connally III
    
    Director
    
    March 16, 2010/s/ Sheldon R. Erikson

Sheldon Erikson
    
    Director
    
    March 16, 2010/s/ Charles Hue Williams

Charles Hue Williams
    
    Director
    
    March 16, 2010/s/ Leiv R. Nergaard

Leiv L. Nergaard
    
    Director
    
    March 16, 2010/s/ Nancy K. Quinn

Nancy K. Quinn
    
    Director
    
    March 16, 2010/s/ John N. Seitz

John N. Seitz
    
    Director
    
    March 16, 2010
 128




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##### Table of Contents



Endeavour International Corporation
 
 Exhibit Index
 Exhibit
    
    Description** 2.1
    
    Purchase and Sale and Participation Agreement by and between Endeavour
and Hillwood Energy Alabama LP. Schedules and Exhibits are omitted
pursuant to Section 601(b)(2) of Regulation S-K. Endeavour agrees to
furnish supplementally a copy of any omitted Schedule to the SEC upon
request. (Incorporated by reference to Exhibit 2.1 of our Current
Report on Form 8-K (Commission File No. 001-32212) filed on January
19, 2010).** 2.2
    
    Purchase and Sale Agreement between Endeavour and Cohort Energy
Company. Schedules and Exhibits are omitted pursuant to Section
601(b)(2) of Regulation S-K. Endeavour agrees to furnish
supplementally a copy of any omitted Schedule to the SEC upon request.
(Incorporated by reference to Exhibit 2.1 of our Current Report on
Form 8-K (Commission File No. 001-32212) filed on January 19, 2010).3.1(a)
    
    Amended and Restated Articles of Incorporation (Incorporated by
reference to Exhibit 3.2 of our Quarterly Report on Form 10-Q
(Commission File No. 001-32212) for the quarter ended June 30, 2004).3.1(b)
    
    Certificate of Amendment dated June 1, 2006 (Incorporated by reference
to Exhibit 4.2 of our Registration Statement on Form S-3 (Commission
File No. 333-139304) filed on December 13, 2006).3.2(a)
    
    Amended and Restated Bylaws (Incorporated by reference to Exhibit 3.4
to our Current Report on Form 8-K (Commission File No. 001-32212)
filed on November 6, 2006).3.2(b)
    
    Amendment to Amended and Restated By-laws dated December 12, 2007 by
Endeavour International Corporation (Incorporated by reference to
Exhibit 3.1 to our Current Report on Form 8-K (Commission File No.
001-32212) filed on December 13, 2007).3.3
    
    Amended and Restated Certificate of Designation of Series B Preferred
Stock filed February 26, 2004 (Incorporated by reference to Exhibit
3.3 of our Quarterly Report on Form 10-Q (Commission File No.
001-32212) for the quarter ended June 30, 2004).3.4
    
    Specimen of Common Stock Certificate (Incorporated by reference to
Exhibit 3.7 of our Quarterly Report on Form 10-Q (Commission File No.
001-32212) for the quarter ended June 30, 2004).3.5
    
    Certificate of Designation of Series A Preferred Stock of Endeavour
International Corporation (Incorporated by reference to Exhibit 3.1 to
our Current Report on Form 8-K (Commission File No. 001-32212) filed
on November 6, 2006).
 129




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##### Table of Contents



Endeavour International Corporation
 Exhibit Index
 Exhibit
    
    Description3.6(a)
    
    Certificate of Designation of Series C Preferred Stock of Endeavour
International Corporation, (Incorporated by reference to Exhibit 3.2
to our Current Report on Form 8-K (Commission File No. 001-32212)
filed on November 6, 2006).3.6(b)
    
    Amendment to Certificate of Designation of Series C Preferred Stock of
Endeavour International Corporation, dated November 17, 2009
(Incorporated by reference to Exhibit 3.1 to our Current Report on
Form 8-K (Commission File No. 001-32212) filed on November 23, 2009).*3.6(c)
    
    Amendment to Certificate of Designation of Series C Preferred Stock of
Endeavour International Corporation, dated March 10, 2010.3.7
    
    Certificate of Designation of Series D Preferred Stock of Endeavour
International Corporation (Incorporated by reference to Exhibit 3.3 to
our Current Report on Form 8-K (Commission File No. 001-32212) filed
on November 6, 2006).4.1 (a)
    
    Warrants to Purchase Common Stock issued to Trident Growth Fund, LP
dated July 29, 2003 (warrant # 2003-3) (Incorporated by reference to
Exhibit 4.7 of our Annual Report on Form 10-KSB (Commission File No.
000-33439) for the year ended December 31, 2003).4.1 (b)
    
    First Amendment to Warrants to Purchase Common Stock dated February
26, 2004 (warrant # 2003-3) (Incorporated by reference to Exhibit 4.7
of our Annual Report on Form 10-KSB (Commission File No. 000-33439)
for the year ended December 31, 2003).4.2
    
    Warrant to Purchase 25,000 Shares of Common Stock issued to Trident
Growth Fund, L.P. (Incorporated by reference to Exhibit 10.11 of our
Annual Report on Form 10-KSB (Commission File No. 000-33439) for the
Year Ended December 31, 2002).4.3
    
    Indenture, dated as of January 20, 2005, between Endeavour
International Corporation and Wells Fargo Bank, National Association,
as Trustee, relating to the 6.00% Convertible Senior Notes due 2012
(Incorporated by reference to our Exhibit 4.1 to our Current Report on
Form 8-K (Commission File No. 001-32212) filed on January 24, 2005).4.4
    
    Registration Rights Agreement dated January 24, 2008 by and between
Endeavour International Corporation and Smedvig QIF Plc (Incorporated
by reference to Exhibit 4.2 to our Current Report on Form 8-K
(Commission File No. 001-32212) filed on January 24, 2008).4.5
    
    Trust Deed dated January 24, 2008 by and among Endeavour International
Corporation, Endeavour Energy Luxembourg S.a.r.l. and BNY Corporate
Trustee Services Limited, as trustee (Incorporated by reference to
Exhibit 4.1 to our Current Report on Form 8-K (Commission File No.
001-32212) filed on January 24, 2008).
 130




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##### Table of Contents



Endeavour International Corporation
 Exhibit Index
 Exhibit
    
    Description4.6
    
    Common Stock Purchase Warrant dated February 26, 2004 issued to
Sanders Morris Harris Inc. in connection with the private placement of
25,000,000 shares of Endeavours common stock. (Incorporated by
reference to Exhibit 10.24 of our Annual Report on Form 10-KSB
(Commission File No. 000-33439) for the year ended December 31, 2003).10.1
    
    2004 Incentive Plan, effective February 26, 2004 (Incorporated by
reference to Exhibit 10.36 of our Annual Report on Form 10-KSB
(Commission File No. 000-33439) for the year ended December 31, 2003).10.2
    
    2007 Incentive Plan (Incorporated by reference to Exhibit 10.1 to our
Quarterly Report (Commission file No. 001-32212) for the quarter ended
June 30, 2007).10.3
    
    Second Amended and Restated Employment Agreement by and between
William L. Transier and the Company (Incorporated by reference to
Exhibit 10.4 to our Annual Report on Form 10-K (Commission File No.
001-32212) for the year ended December 31, 2008).10.4
    
    Employment Offer Letter to Carl Grenz, dated August 15, 2008
(Incorporated by reference to Exhibit 10.1 of our Quarterly Report on
Form 10-Q (Commission File No. 001-32212) for the quarter ended
September 30, 2008).10.5
    
    Form of Change in Control on Termination of Benefits Agreement
(Incorporated by reference to Exhibit 10.1 to our Current Report on
Form 8-K (Commission File No. 000-32212) filed on February 15, 2008).10.6
    
    Form of Amended Change in Control Termination Benefits Agreement
between the Company and Kirksey, Grenz, Williams and Stover,
individually (Incorporated by reference to Exhibit 10.8 of our Annual
Report on Form 10-K for the year ended December 31, 2008).*10.7
    
    Change in Control and Termination Benefits Agreement dated January 11,
2010, by and between Endeavour International Corporation and James
Joseph Emme.10.8
    
    Form of Restricted Stock Award Agreement. (Incorporated by reference
to Exhibit 10.39 of our Annual Report on Form 10-KSB (Commission File
No. 000-33439) for the year ended December 31, 2003).10.9
    
    Form of Nonstatutory Stock Option Agreement between Endeavour
International Corporation and William L. Transier, John N. Seitz,
Michael D. Cochran, Bruce H. Stover, H. Don Teague and Robert L.
Thompson, individually (Incorporated by reference to Exhibit 10.1 to
our Current Report on Form 8-K (Commission File No. 001-32212) filed
on January 5, 2005.)
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Endeavour International Corporation
 Exhibit Index
 Exhibit
    
    Description10.10
    
    Form of Stock Grant Agreement between Endeavour International
Corporation and William L. Transier, John N. Seitz, Bruce H. Stover
and Robert L. Thompson, individually (Incorporated by reference to
Exhibit 10.4 to our Current Report on Form 8-K (Commission File No.
001-32212) filed on January 5, 2005).10.11(a)
    
    Subscription and Registration Rights Agreement, dated October 19,
2006, by and among Endeavour International Corporation and the
Investors party thereto (Incorporated by reference to Exhibit 10.1 to
our Current Report on Form 8-K (Commission File No. 001-32212) filed
on October 25, 2006).10.11(b)
    
    Amendment No. 1 to Subscription and Registration Rights Agreement,
January 29, 2010, by and among Endeavour International Corporation and
the Investors party thereto (Incorporated by reference to Exhibit 10.1
to our Current Report on Form 8-K (Commission File No. 001-32212)
filed on February 1, 2010).**10.12
    
    Final Participation Agreement between Endeavour and Cohort Energy
Company (Incorporated by reference to Exhibit 10.2 to our Current
Report on Form 8-K (Commission File No. 001-32212) filed on January
19, 2010).10.13(a)
    
    $225,000,000 Secured Revolving Loan and Letter of Credit Facility
Agreement (Incorporated by reference to Exhibit 10.1 to our Current
Report on Form 8-K (Commission File No. 001-32212) filed on November
6, 2006).10.13(b)
    
    Waiver and consent to $225,000,000 Secured Revolving Loan and Letter
of Credit Facility Agreement (Incorporated by reference to Exhibit
4.8(b) to our Annual Report on Form 10-K (Commission File No.
001-32212) for the year ended December 31, 2006).*10.13(c)
    
    Waiver and consent to $225,000,000 Secured Revolving Loan and Letter
of Credit Facility Agreement, dated as of February 5, 2010.10.14(a)
    
    Second Lien Credit and Guarantee Agreement (Incorporated by reference
to Exhibit 10.2 to our Current Report on Form 8-K/A (Commission File
No. 001-32212) filed on November 7, 2006).10.14(b)
    
    Amendment to Second Lien Credit and Guarantee Agreement (Incorporated
by reference to Exhibit 4.9(b) to our Annual Report on Form 10-K
(Commission File No. 001-32212) for the year ended December 31, 2006).10.15(a)
    
    Junior Facility Agreement dated January 22, 2008 by and among
Endeavour International Holding B.V., as borrower, Endeavour
International Corporation and certain of its affiliates party thereto,
as guarantors, BNP Paribas and Bank of Scotland Plc, as the mandated
lead arrangers and original lenders, and BNP Paribas, as agent and
security trustee (Incorporated by reference to Exhibit 10.1 to our
Current Report on Form 8-K (Commission File No. 001-32212) filed on January 28, 2008).
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Endeavour International Corporation
 Exhibit Index
 Exhibit
    
    Description*10.15(b)
    
    Amendment to Junior Facility Agreement dated February 5, 2010 by and
among Endeavour International Holding B.V., as borrower, Endeavour
International Corporation and certain of its affiliates party thereto,
as guarantors, BNP Paribas and Bank of Scotland Plc, as the mandated
lead arrangers and original lenders, and BNP Paribas, as agent and
security trustee.10.16
    
    Restricted Stock Award Agreement between Endeavour International
Corporation and J. Michael Kirksey dated September 26, 2007
(Incorporated by reference to Exhibit 10.31 to our Annual Report on
Form 10-K (Commission File No. 001-32212) for the year ended December
31, 2007).10.17
    
    Restricted Stock Award Agreement between Endeavour International
Corporation and John G. Williams dated October 1, 2007 (Incorporated
by reference to Exhibit 10.32 to our Annual Report on Form 10-K
(Commission File No. 001-32212) for the year ended December 31, 2007).10.18
    
    Stock Option Agreement between Endeavour International Corporation and
J. Michael Kirksey dated September 26, 2007 (Incorporated by reference
to Exhibit 10.33 to our Annual Report on Form 10-K (Commission File
No. 001-32212) for the year ended December 31, 2007).10.19
    
    Stock Option Agreement between Endeavour International Corporation and
John G. Williams dated October 1, 2007 (Incorporated by reference to
Exhibit 10.34 to our Annual Report on Form 10-K (Commission File No.
001-32212) for the year ended December 31, 2007).10.20
    
    Stock Option Agreement between Endeavour International Corporation and
Carl D. Grenz dated November 3, 2008 (Incorporated by reference to
Exhibit 10.22 to our Annual Report on Form 10-K (Commission File No.
001-32212) for the year ended December 31, 2008).10.21
    
    Stock Option Agreement between Endeavour International Corporation and
Carl D. Grenz dated November 3, 2008 (Incorporated by reference to
Exhibit 10.23 to our Annual Report on Form 10-K (Commission File No.
001-32212) for the year ended December 31, 2008).10.22
    
    Restricted Stock Award Agreement between Endeavour International
Corporation and Carl D. Grenz dated November 3, 2008 (Incorporated by
reference to Exhibit 10.24 to our Annual Report on Form 10-K
(Commission File No. 001-32212) for the year ended December 31, 2008).10.23
    
    Restricted Stock Award Agreement between Endeavour International
Corporation and Carl D. Grenz dated November 3, 2008 (Incorporated by
reference to Exhibit 10.25 to our Annual Report on Form 10-K
(Commission File No. 001-32212) for the year ended December 31, 2008).
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Endeavour International Corporation
 Exhibit Index
 Exhibit
    
    Description10.24
    
    Agreement for the Sale and Purchase of the Endeavour Energy Norge AS
dated April 2, 2009 (Incorporated by reference to Exhibit 4.1 of our
Quarterly Report on Form 10-Q (Commission File No. 001-32212) for the
quarter ended March 31, 2009).10.25
    
    Form of Stock Redemption Agreement dated November 17, 2009 by and
among Endeavour International Corporation and the holders of its
Series C Preferred Stock (Incorporated by reference to Exhibit 10.1 to
our Current Report on Form 8-K (Commission File No. 001-32212) filed
on November 23, 2009).10.26(a)
    
    Form of Note Agreement dated November 17, 2009 by and among Endeavour
International Corporation and the holders of its Series C Preferred
Stock (Incorporated by reference to Exhibit 10.2 to our Current Report
on Form 8-K (Commission File No. 001-32212) filed on November 23,
2009).*10.26(b)
    
    Amendment to Note Agreement dated November 17, 2009 by and among
Endeavour International Corporation and the holders of its Series C
Preferred Stock, dated March 10, 2010.10.27
    
    Common Stock Purchase Agreement, dated as of February 4, 2010, by and
between Endeavour International Corporation and the purchasers named
therein ((Incorporated by reference to Exhibit 10.1 to our Current
Report on Form 8-K (Commission File No. 001-32212) filed on February
5, 2010).10.28
    
    Registration Rights Agreement, dated as of February 4, 2010, by and
between Endeavour International Corporation and the purchasers named
therein (Incorporated by reference to Exhibit 10.2 to our Current
Report on Form 8-K (Commission File No. 001-32212) filed on February
5, 2010).*12.1
    
    Computation of Ratios of Earnings to Fixed Charges.*12.2
    
    Computation of Ratios of Earnings to Fixed Charges and Preference
Securities Dividends.*21.1
    
    List of Subsidiaries.*23.1
    
    Consent of Independent Registered Public Accounting Firm  KPMG LLP.*23.2
    
    Consent of Independent Reserve Engineers  Netherland, Sewell &
Associates, Inc.*31.1
    
    Certification of William L. Transier, Chief Executive Officer,
pursuant to Rule 13a-14(a) of the Securities and Exchange Act of 1934,
as amended.*31.2
    
    Certification of J. Michael Kirksey, Chief Financial Officer, pursuant
to Rule 13a-14(a) of the Securities and Exchange Act of 1934, as
amended.32.1
    
    Certification of William L. Transier, Chief Executive Officer,
pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
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Endeavour International Corporation
 Exhibit Index
 Exhibit
    
    Description32.2
    
    Certification of J. Michael Kirksey, Chief Financial Officer, pursuant
to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.99.1
    
    Report of Netherland, Sewell & Associates, Inc., Independent Petroleum
Engineers and Geologists.
 
 *
    
    Filed herewith.
    
    Furnished herewith.
    
    Identifies management contracts and compensatory plans or arrangements.**
    
    Portions of this exhibit have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act
of 1934, and the omitted material has been separately filed with the
Securities and Exchange Commission. 135