United States
Securities and Exchange Commission
 Washington, D.C. 20549
 Form 10-K/A
 (Amendment No. 1)
 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 IIItem 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    1Item 8. Financial Statements and Supplementary Data
    
    
    23Part IIIItem 11. Executive Compensation
    
    
    87Part IVItem 15. Exhibits and Financial Statement Schedules
    
    
    107Signatures
    
    
    108
 
  
 Quantities
of natural gas are expressed in this Annual Report on Form 10-K/A 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
 
 Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 
  
 Overview
   
 
 
  
 1




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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.
 2




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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  the Njord field in
Norway during the fourth quarter of 2007.
    
    Extreme volatility in commodity prices over the last three years as discussed
above.
    
    Sale of our discontinued operations in Norway in May 2009.
 
  
 
  
 3




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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): (2)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 (3)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)  (4)
    
    $
    12.97
    
    
    $
    14.40
    
    
    $
    12.56
 4




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Endeavour International Corporation
 (1)
    
    We record oil revenues on the sales method, i.e. when delivery has occurred. We use the entitlements
method to account for sales of gas production.(2)
    
    Physical production may differ from sales volumes based on the timing of tanker
liftings for our international oil sales.(3)
    
    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.(4)
    
    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.
    5




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Endeavour International Corporation
 Operating Expenses
  DD&A and Impairment of Oil and Gas Properties
    General and Administrative (G&A) Expenses
  6




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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
  7




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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
    )
    8




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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
    )
    9




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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.
       10




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Endeavour International Corporation
   Recent Financing Arrangements
  Non-GAAP Measures
   11




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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.
  12




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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. 13




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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
  14




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Endeavour International Corporation
     
  
 
  
 
  
 
  
  
    
    Continuing to execute current operations plan;
 15




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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
  16




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##### 



Endeavour International Corporation
 Rig Commitments
  Critical Accounting Policies and Estimates
    Full Cost Accounting
   17




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Endeavour International Corporation
      18




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Endeavour International Corporation
 Business Combinations
   Goodwill and Intangible Assets
    19




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##### 



Endeavour International Corporation
  Dismantlement, Restoration and Environmental Costs
 
  
  Revenue Recognition
  Derivative Instruments and Hedging Activities
   20




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##### 



Endeavour International Corporation
    Income Taxes
  Stock-Based Compensation Arrangements
   21




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Endeavour International Corporation
 Fair Value
  22




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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
 
 23




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##### 



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 ($154,553 and
$134,556 not subject to amortization at 2009 and 2008, respectively)
    
    
    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
 
  24




---



##### 



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
  25




---



##### 



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
  26




---



##### 



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
  27




---



##### 



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
  28




---



##### 



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
    )
  29




---



##### 



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
  30




---



##### 



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
 Restricted Cash
  Inventories
  Full Cost Accounting for Oil and Gas Operations
     31




---



##### 



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
   Other Property and Equipment
  Capitalized Interest
  32




---



##### 



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
 Marketable Securities
  Business Combinations
   Goodwill and Intangible Assets
  Dismantlement, Restoration and Environmental Costs
  33




---



##### 



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
  Revenue Recognition
  Significant Customers
  Derivative Instruments and Hedging Activities
   34




---



##### 



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
     Concentrations of Credit and Market Risk
    35




---



##### 



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
  Foreign Currency Translation
  Income Taxes
  Share-Based Payments
  36




---



##### 



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
 37




---



##### 



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
   38




---



##### 



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
 39




---



##### 



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
 40




---



##### 



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
   41




---



##### 



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
 42




---



##### 



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
 43




---



##### 



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
  44




---



##### 



Endeavour International Corporation
Notes to Consolidated Financial Statements  ( )
  Senior bank facility
  
  
 
  
 
 th st
 
 
    
    a maximum consolidated net debt to earnings before interest, taxes, depreciation and
amortization (EBITDA) ratio of 3.0:1; and
    
    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.
  45




---



##### 



Endeavour International Corporation
Notes to Consolidated Financial Statements  ( )
  Convertible Bonds
     46




---



##### 



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
  47




---



##### 



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
  48




---



##### 



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
   49




---



##### 



Endeavour International Corporation
Notes to Consolidated Financial Statements  ( )
 Convertible Preferred Stock
       50




---



##### 



Endeavour International Corporation
Notes to Consolidated Financial Statements  ( )
     Series B Preferred Stock
  51




---



##### 



Endeavour International Corporation
Notes to Consolidated Financial Statements  ( )
  Note
12  Income Taxes
  52




---



##### 



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
    )
  53




---



##### 



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
    )%
   54




---



##### 



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
   55




---



##### 



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
   
  
 
 Year Ended December 31,2009
    
    2008
    
    2007Balance at the beginning of the year
    
    $
    
    
    
    $
    1,727
    
    
    $
    Increase (decrease) in unrecognized
tax benefits from current period
tax position
    
    
    
    
    
    
    (1,727
    )
    
    
    1,727Balance at the end of the year
    
    $
    
    
    
    $
    
    
    
    $
    1,727
 
   Note
13  Stock-Based Compensation Arrangements
   56




---



##### 



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
    
    
    
    
    
    
    
    
    
    
    
 57




---



##### 



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
    58




---



##### 



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
   59




---



##### 



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
  60




---



##### 



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
    )
  61




---



##### 



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
    )
  62




---



##### 



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.
   63




---



##### 



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
  64




---



##### 



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
 Goodwill 
  Note
18  Derivative Instruments
  65




---



##### 



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
    )
    
    $
    
  66




---



##### 



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
  67




---



##### 



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
   Note
20  Commitments and Contingencies
 General
  Operating Leases
  Rig Commitments
  Participation Agreement
  68




---



##### 



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
 69




---



##### 



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
 70




---



##### 



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
 Note
23  Subsequent Events
 Asset Acquisitions
   
  
 Series C Convertible Preferred Stock
   Common Stock Issuance
  71




---



##### 



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
  Junior Facility
  
  
 Senior Bank Facility
  2011 Debt Maturities
 
  
 72




---



##### 



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.
  73




---



##### 



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
 74




---



##### 



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
    
    
    $
    
    
    
    $
    16,588Unproved
    
    
    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
 
 75




---



##### 



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
  76




---



##### 



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
   77




---



##### 



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
 78




---



##### 



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
 79




---



##### 



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
 
  
 
  
 80




---



##### 



Endeavour International Corporation
Notes to Consolidated Financial Statements
( )
    81




---



##### 



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
 82




---



##### 



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
 83




---



##### 



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
    84




---



##### 



Endeavour International Corporation
  Changes in Internal Control over Financial Reporting
  Report of Independent Registered Public Accounting Firm
 
 Internal Control  Integrated Framework
   85




---



##### 



Endeavour International Corporation
  Internal Control  Integrated Framework
   
 86




---



##### 



Endeavour International Corporation
 
 Item 11. Executive Compensation
 
 Compensation Discussion and Analysis
  87




---



##### 



Business Context
      The Purpose of Our Executive Compensation Program
  88




---



##### 




    
    Continue to grow our business in alignment with our stated long-term strategy;
    
    Build significant stockholder wealth over the long-term;
    
    Deliver annual performance that reflects the execution of our stated strategy based on
annual goals;
    
    Focus on delivering results as a leader in safety and environmental performance;
    
    Remain with us over the long-term; and
    
    Reflect the value we place on innovation and personal contribution.
 Our Philosophy
  
    
    Compensation programs should be designed to allow us to attract and retain very
experienced and high caliber professionals and executives in the oil and gas industry.
This is a challenge to all in our industry, but we strongly believe that the attraction and
retention of highly qualified executive talent is a key to the execution of our strategy.
As we seek to expand our operations, we have designed our compensation program to attract
the type of executive who has the talent and experience to successfully carry out our
business model.
    
    Compensation programs should relate to both individual and Company performance. We
believe that our compensation programs should provide the opportunity for our CEO and other
executive officers to earn performance-based compensation that is competitive with
similarly situated executives of other public companies within the oil and gas industry in
the U.S. and European markets. To help ensure that we understand the competitive
environment, the Committee has retained Hewitt Associates as an compensation consultant to
assist with this competitive analysis. While we believe that the definition of competitors
should generally consider companies in our peer group of similarly situated oil and gas
companies, we also recognize that it is difficult to limit the definition to that universe
since the competition for talent often crosses many segments of the industry and several
different countries.
    
    Compensation programs should closely align the interests of executives with those of
stockholders. For this reason, we have designed programs that base a significant portion
of executive compensation on stock-based incentive awards. We believe that this strong
focus on equity compensation best reflects our place in the business cycle and provides the
best opportunity for attracting the right mix of executive talent.
    
    Compensation programs should reflect our place in the business cycle and the
accompanying risk profile of the business. We understand that a company in a growth mode
of the business cycle generally represents greater career risk to employees than employment
at a mature energy company. For this reason, our incentive compensation programs provide
for a higher percentage of at-risk compensation for our executives. Similarly, we
generally de-emphasize executive benefits and perquisites compared to more mature companies
in our industry.
 89




---



##### 



Factors Influencing Compensation
 Market Data
 
  
 
  
 U.S.-based Companies:
 
 U.K.-based companies:
 
 Company Performance  2009
 
  
 
 
    
    Maintain or reduce G&A and operating expenses;
    
    Negotiate removal of the Series C Preferred Stock anti-dilution provisions;
    
    Maintain or expand credit facilities;
    
    Complete at least one acquisition and two business development activities to improve
growth potential in core areas;
    
    File Field Development Plans for U.K. development projects;
    
    Optimize production;
    
    Add reserves through exploration success; and
    
    Improve shareholder returns and value.
 
 
  
 
 
    
    We reduced our operating and G&A expenses by a combined $13 million from 2008 to 2009;
    
    In November 2009, we redeemed a portion and amended the terms of our Series C Preferred
Stock to, among other things, remove the anti-dilution provisions. These amendments
reduced dilution to common stockholders by approximately 80 million shares and reduced
overall cost of this capital;
    
    We executed two capital raises during the later part of 2009 culminating in early 2010;
    
    During 2009, we completed the sale of our Norwegian assets and operations and purchased
producing and exploration acreage in the U.S. This sale represented a significant return
on invested capital for investors and resulted in a gain on sale of $47 million;
    
    Field development plans for our development projects at Cygnus and Columbus were
submitted;
    
    Maintained production, after the sale of our Norwegian assets, at budgeted levels;
    
    Significant appraisal drilling successes at Cygnus and Rochelle and our U.S.
acquisitions added proved reserves to our reserve base; and
    
    Endeavours stock price increased from $0.50 per share at December 31, 2008 to
$1.08 per share at December 31, 2009.
 
 
  
  
    
    Continued execution of the development program.The Companys three major development
projects, the Rochelle, Cygnus and Columbus development fields in the UK sector of the
North Sea, continued to progress with field development plans submitted for review and
approval by the UK regulatory authorities.
    
    Success of the exploration program.We had continued successful appraisal drilling at
our Rochelle and Cygnus development projects.
 90




---



##### 




    
    Optimizing value of our Norwegian operations.The sale of our Norwegian operations
provided significant returns over our investment in Norway and allowed Endeavour to pursue
US onshore opportunities through acquisition or Joint Ventures reducing its interests in
higher risk exploration.
    
    Improving the Companys portfolio through business development.Our expansion into the
U.S. allows us to include projects that have a lower cost and short lead-time to first
production than our operations in the North Sea.
    
    Maintain existing production.The Company successfully managed production during 2009,
meeting our goals and guidance established at the beginning of the year.
    
    Managing both operational and G&A expenses.The Company reduced operating expenses from
2008 and controlled general and administrative expenses, keeping 2009 costs in line with
2008.
    
    Simplifying and strengthening our capital structure.With cash flow from operations and
our Norwegian operations sale, we repaid a portion of outstanding debt, redeemed a portion
of our outstanding preferred stock and eliminated certain anti-dilution provisions in the
outstanding preferred stock
 
  
 Individual Performance
  
  
 Elements of Executive Compensation
 
  
  Base Salary
  
 
 91




---



##### 



Annual Bonus
 
 
  
 
 
 92




---



##### 



Stock-Based Incentive Compensation
 
 
  
 Percentage ofTotal AwardType of Award
    
    Vesting Period
    
    ValueRestricted Stock
    
    Time based, one-third per year
    
    
    32.5
    %Stock Options
    
    Time based, one-third per year
with the exercise price set
based on the closing price on
the date of the grant.
    
    
    12.5
    %Cash Performance Target Award
    
    Time based, one-third per year.
Cash award made based on the
average closing stock price for
the last 20 trading days prior
to the vesting date:   If average
stock price
is greater than or equal to
$1.20 at the end of each
period, 200% of target is paid.
    
    
    55
    %   If average
stock price
is between $0.60 and $1.19 at
the end of each period, between
100% and 200% of target is
paid.   If average
stock price
is between $0.30 and $0.60 at
the end of each period, between
50% and 100% of the target is
paid   If the
average stock
price is less than $0.30 at the
end of each period, no award is
earned.
 93




---



##### 



2009 Compensation Assessment
 
 
 Base Salary
 
 
  
 
 Annual Bonus
 
 
  
 
 Percent ofOfficer
    
    Target Earned
    
    
    Material FactorsWilliam L. Transier
    
    
    150
    %
    
    Assessed based on the overall performance of the Company
in relation to the 2009 goals that were achieved and
significant involvement in the negotiation and ultimate
sale of Norway, renegotiation and redemption of Series C
Convertible Preferred Stock and initiation of U.S,
portfolio. All three represented significant strategic
steps for the Company.Carl D. Grenz
    
    
    85
    %
    
    Continued efforts to bring North Sea developments on line.J. Michael Kirksey
    
    
    100
    %
    
    Played a key role in simplifying capital structure and
maintaining capital flexibility for our operating
activities.Bruce H. Stover
    
    
    120
    %
    
    Played a key role in expanding our operations into the US.John G. Williams
    
    
    78
    %
    
    Played a key role in the sale of Norway and appraisal
drilling successes in 2009.
 
 
  
 
 Stock-Based Incentive Compensation
 
  CashRestricted
    
    Stock
    
    PerformanceOfficer
    
    Shares
    
    Options
    
    Award
    
    CommentsWilliam L. Transier
    
    
    375,000
    
    
    
    340,909
    
    
    $
    825,000
    
    
    The Committee
desired to provide
a significant
performance tie to
longer-term
performanceCarl D. Grenz
    
    
    50,000
    
    
    
    45,455
    
    
    $
    110,000
    
    
    Reduced award
due to recently
receiving sign-on
award for late 2008
hireJ. Michael Kirksey
    
    
    175,000
    
    
    
    159,091
    
    
    $
    385,000
    
    
    Generally
reflective of his
position in our
industryBruce H. Stover
    
    
    150,000
    
    
    
    136,364
    
    
    $
    330,000
    
    
    Generally
reflective of his
position in our
industryJohn G. Williams
    
    
    200,000
    
    
    
    181,818
    
    
    $
    440,000
    
    
    Generally
reflective of his
position in our
industry
 94




---



##### 



Stock-Based Incentive Awards Program  2010
  Percentage of TotalType of Award
    
    Vesting Period
    
    Award ValueRestricted Stock
    
    Time based, one-third per year
    
    
    40
    %Cash Performance 
Target Award
    
    Cash award made based on one
month average closing stock
price at end of each year
during three year period
    
    
    60
    %
  Perquisites and Personal Benefits
    International Assignment Policy
  95




---



##### 




    
    fair and equitable treatment between employees on international assignments and their
home-country counterparts;
    
    compliance with applicable legal statutes in countries of operation; and
    
    cost effective, common and consistent policies and procedures.
   Extensive Travel Policy
  
    
    Excess Travel Payment  1% of base pay for each 10 day period the extensive traveler is
away from their permanent residence and is taxable compensation. This payment is in
addition to the normal performance bonus the Company may from time to time have in effect.
    
    Per Diem Payment  per diem reimbursement, as outlined by the IRS, for their travel
days, and is not considered taxable income.
 Severance Benefits
  96




---



##### 



Oversight of the Executive Compensation Programs and Compensation Committee Membership
 
  
  
    
    Evaluating and approving the Companys overall compensation strategy;
    
    Annually reviewing the performance of and setting the compensation (i.e., salary,
incentive awards, and all other elements) for the Companys CEO;
    
    Annually reviewing the performance of and setting the compensation for the other
executive officers after considering the CEOs recommendations; and
    
    Reviewing and approving annual incentive payouts and long-term incentive awards under
our plans.
   Accounting and Tax Implications
   
 Executive Compensation
 Summary Compensation Table
  97




---



##### 



Stock
    
    Option
    
    All OtherSalary
    
    Bonus
    
    Awards
    
    Awards
    
    Compensation
    
    TotalName and Principal Position
    
    Year
    
    ($)
    
    ($)
    
    ($)
    
    ($)
    
    ($)
    
    ($)(6)
    
    
    
    (7)
    
    
    
    (7)
    
    
    
    (8)William L.
Transier (1)
    
    
    2009
    
    
    
    800,000
    
    
    
    1,200,000
    
    
    
    202,500
    
    
    
    83,615
    
    
    
    153,800
    
    
    
    2,439,915Chief Executive Officer, President
    
    
    2008
    
    
    
    800,000
    
    
    
    600,000
    
    
    
    673,200
    
    
    
    266,564
    
    
    
    297,716
    
    
    
    2,637,480and Director
    
    
    2007
    
    
    
    800,000
    
    
    
    
    
    
    
    575,000
    
    
    
    
    
    
    
    53,162
    
    
    
    1,428,162Carl D.
Grenz (2)
    
    
    2009
    
    
    
    400,000
    
    
    
    204,000
    
    
    
    27,000
    
    
    
    11,149
    
    
    
    711,794
    
    
    
    1,353,943Executive Vice President, Operations
    
    
    2008
    
    
    
    70,666
    
    
    
    
    
    
    
    225,000
    
    
    
    84,537
    
    
    
    74,107
    
    
    
    454,310J. Michael
Kirksey (3)
    
    
    2009
    
    
    
    400,000
    
    
    
    240,000
    
    
    
    94,500
    
    
    
    39,020
    
    
    
    106,300
    
    
    
    879,820Executive Vice President and Chief
    
    
    2008
    
    
    
    350,000
    
    
    
    180,000
    
    
    
    73,920
    
    
    
    29,618
    
    
    
    51,200
    
    
    
    684,738Financial Officer
    
    
    2007
    
    
    
    91,538
    
    
    
    37,500
    
    
    
    408,000
    
    
    
    83,704
    
    
    
    
    
    
    
    620,742Bruce H.
Stover (4)
    
    
    2009
    
    
    
    415,000
    
    
    
    300,000
    
    
    
    81,000
    
    
    
    33,446
    
    
    
    766,198
    
    
    
    1,595,644Executive Vice President, Business
    
    
    2008
    
    
    
    415,000
    
    
    
    180,000
    
    
    
    297,000
    
    
    
    117,396
    
    
    
    717,166
    
    
    
    1,726,562Development and New Ventures
    
    
    2007
    
    
    
    400,000
    
    
    
    80,000
    
    
    
    230,000
    
    
    
    
    
    
    
    568,096
    
    
    
    1,278,096John G.
Williams (5)
    
    
    2009
    
    
    
    425,000
    
    
    
    200,000
    
    
    
    108,000
    
    
    
    44,595
    
    
    
    636,536
    
    
    
    1,414,131Executive Vice President, Exploration
    
    
    2008
    
    
    
    400,000
    
    
    
    240,000
    
    
    
    73,920
    
    
    
    29,618
    
    
    
    582,709
    
    
    
    1,326,2472007
    
    
    
    100,000
    
    
    
    
    
    
    
    456,000
    
    
    
    93,201
    
    
    
    127,637
    
    
    
    776,838
 
 (1)
    
    Mr. Transiers bonus for 2009 consisted of
$1,000,000 paid in cash and $200,000 paid by the issuance of 200,000
fully vested shares of common stock.(2)
    
    Mr. Grenz joined the Company in November 2008, as Executive Vice President, Operations.(3)
    
    Mr. Kirksey joined the Company in September 2007, as Executive Vice President and Chief
Financial Officer.(4)
    
    Mr. Stover retired effective March 1, 2010.(5)
    
    Mr. Williams joined the Company in October 2007 as Executive Vice President, Exploration.(6)
    
    The amounts represent annual bonus amounts earned during the year and paid at the beginning
of the subsequent year.(7)
    
    For a discussion of restricted stock and stock option awards granted in 2009, see
Compensation Discussion and Analysis  Stock-Based Incentive Compensation. The amounts
reflect the full fair market value on the date of grant, assuming the completion of
service-based vesting conditions. However, as required, the amounts shown exclude the impact
of estimated forfeitures related to service-based vesting conditions. There is no assurance
that the FAS 123R amounts reflected in this table will ever be realized by the Named Executive
Officers. See Note 13 of the consolidated financial statements in the Companys Annual Report
on Form 10-K for the year ended December 31, 2009 regarding assumptions underlying valuation
of equity awards.(8)
    
    This column includes personal benefits and other items shown in the table below. Other
compensation costs of $37,560 for Mr. Williams during 2007 represent relocation costs. In
valuing personal benefits, we use the incremental cost to the Company of the benefit. 98




---



##### 



Cost Of
    
    Foreign Tax and
    
    Extensive
    
    Housing
    
    CompanyLiving
    
    Tax Equalization
    
    Travel
    
    Lease
    
    401(k) MatchingYear
    
    Adjustment
    
    Payments
    
    Payments
    
    Costs
    
    Contributions
    
    Other
    
    TotalMr. Transier
    
    
    2009
    
    
    
    
    
    
    
    
    
    
    
    144,000
    
    
    
    
    
    
    
    9,800
    
    
    
    
    
    
    
    153,8002008
    
    
    
    
    
    
    
    
    
    
    
    288,516
    
    
    
    
    
    
    
    9,200
    
    
    
    
    
    
    
    297,7162007
    
    
    
    
    
    
    
    
    
    
    
    44,162
    
    
    
    
    
    
    
    9,000
    
    
    
    
    
    
    
    53,162Mr. Grenz
    
    
    2009
    
    
    
    133,669
    
    
    
    398,049
    
    
    
    
    
    
    
    170,276
    
    
    
    9,800
    
    
    
    
    
    
    
    711,7942008
    
    
    
    19,018
    
    
    
    
    
    
    
    
    
    
    
    55,089
    
    
    
    
    
    
    
    
    
    
    
    74,107Mr. Kirksey
    
    
    2009
    
    
    
    
    
    
    
    
    
    
    
    96,500
    
    
    
    
    
    
    
    9,800
    
    
    
    
    
    
    
    106,3002008
    
    
    
    
    
    
    
    
    
    
    
    42,000
    
    
    
    
    
    
    
    9,200
    
    
    
    
    
    
    
    51,200Mr. Stover
    
    
    2009
    
    
    
    55,244
    
    
    
    562,935
    
    
    
    
    
    
    
    138,219
    
    
    
    9,800
    
    
    
    
    
    
    
    766,1982008
    
    
    
    110,488
    
    
    
    310,076
    
    
    
    
    
    
    
    287,402
    
    
    
    9,200
    
    
    
    
    
    
    
    717,1662007
    
    
    
    96,065
    
    
    
    208,662
    
    
    
    
    
    
    
    262,503
    
    
    
    
    
    
    
    866
    
    
    
    568,096Mr. Williams
    
    
    2009
    
    
    
    78,046
    
    
    
    388,239
    
    
    
    
    
    
    
    160,451
    
    
    
    9,800
    
    
    
    
    
    
    
    636,5362008
    
    
    
    104,728
    
    
    
    210,899
    
    
    
    
    
    
    
    257,882
    
    
    
    9,200
    
    
    
    
    
    
    
    582,7092007
    
    
    
    21,133
    
    
    
    
    
    
    
    
    
    
    
    68,944
    
    
    
    
    
    
    
    37,560
    
    
    
    127,637
 Employment, Change-in-Control and Severance Agreements
 2009 Grants of Plan-Based Awards Table
 Employment, Change in Control and Severance Agreements
 99




---



##### 



EstimatedPossible
    
    EstimatedPayouts
    
    Future
    
    All Other
    
    All Other OptionUnder Non-
    
    Payouts
    
    Stock
    
    Awards:
    
    
    
    
    
    Grant DateEquity
    
    Under Equity
    
    Awards:
    
    Number of
    
    Exercise or
    
    Fair Value ofIncentive Plan
    
    Incentive
    
    Number of
    
    Securities
    
    Base Price
    
    Stock andAwards
    
    Plan Awards
    
    Shares of
    
    Underlying
    
    of Option
    
    OptionTarget
    
    Target
    
    Stock or Units
    
    Options
    
    Awards
    
    AwardsName
    
    Grant Date
    
    Approval Date
    
    ($)
    
    (#)
    
    (#) (2)
    
    (#)
    
    ($/Sh)
    
    ($)(1)
    
    
    
    (1)
    
    
    
    (2)
    
    
    
    
    
    
    
    (3)
    
    
    
    (3)Mr. Transier
    
    
    01/02/2009
    
    
    
    12/11/2008
    
    
    
    825,000
    
    
    
    
    
    
    
    375,000
    
    
    
    340,909
    
    
    $
    0.54
    
    
    
    83,615Mr. Grenz
    
    
    01/02/2009
    
    
    
    12/11/2008
    
    
    
    110,000
    
    
    
    
    
    
    
    50,000
    
    
    
    45,455
    
    
    $
    0.54
    
    
    
    11,149Mr. Kirksey
    
    
    01/02/2009
    
    
    
    12/11/2008
    
    
    
    385,000
    
    
    
    
    
    
    
    175,000
    
    
    
    159,091
    
    
    $
    0.54
    
    
    
    39,020Mr. Stover
    
    
    01/02/2009
    
    
    
    12/11/2008
    
    
    
    330,000
    
    
    
    
    
    
    
    150,000
    
    
    
    136,364
    
    
    $
    0.54
    
    
    
    33,446Mr. Williams
    
    
    01/02/2009
    
    
    
    12/11/2008
    
    
    
    440,000
    
    
    
    
    
    
    
    200,000
    
    
    
    181,818
    
    
    $
    0.54
    
    
    
    44,595
 
 (1)
    
    Under our compensation policy, the Compensation Committee approves annual grants of stock
awards at its regularly scheduled meeting in December for awards to be issued at the beginning
of the following year. The exercise price of any options granted is set at the closing price
on the grant date.(2)
    
    The awards vest in equal annual installments over a three-year period. Cash award is paid
based on the change in the on the average closing stock price for the last 20 trading days
prior to the vesting date versus $0.60. See Stock-Based Incentive Awards  2009 Grants
above for details of the payout.(3)
    
    The awards vest in equal annual installments over a three-year period. 2009 Outstanding Equity Awards at Fiscal Year-End Table
  Option Awards
    
    Stock AwardsNumber of Securities Underlying
    
    
    
    
    
    Number of Shares
    
    Market Value ofUnexercised Options
    
    Option
    
    
    
    or Units of Stock
    
    Shares or Units of(#)
    
    Exercise
    
    
    
    That Have Not
    
    Stock That HavePrice
    

    Option
    
    Vested
    
    Not VestedName
    
    Exercisable
    
    Unexercisable
    
    ($)
    
    Expiration Date
    
    (#)
    
    ($)Mr. Transier
    
    
    
    
    
    
    340,909
    (1)
    
    
    0.54
    
    
    
    01/02/2019
    
    
    
    798,333
    (6)
    
    
    862,200165,000
    
    
    
    330,000
    (2)
    
    
    1.32
    
    
    
    01/02/2018125,000
    
    
    
    
    
    
    
    3.51
    
    
    
    01/02/2011250,000
    
    
    
    
    
    
    
    4.20
    
    
    
    01/02/2010Mr. Grenz
    
    
    
    
    
    
    45,455
    (1)
    
    
    0.54
    
    
    
    01/02/2019
    
    
    
    183,333
    (7)
    
    
    198,000116,667
    
    
    
    133,333
    (3)
    
    
    0.75
    
    
    
    11/03/2018
 100




---



##### 



Option Awards
    
    Stock AwardsNumber of Securities Underlying
    
    
    
    
    
    Number of Shares
    
    Market Value ofUnexercised Options
    
    Option
    
    
    
    or Units of Stock
    
    Shares or Units of(#)
    
    Exercise
    
    
    
    That Have Not
    
    Stock That HavePrice
    

    Option
    
    Vested
    
    Not VestedName
    
    Exercisable
    
    Unexercisable
    
    ($)
    
    Expiration Date
    
    (#)
    
    ($)Mr. Kirksey
    
    
    
    
    
    
    159,091
    (1)
    
    
    0.54
    
    
    
    01/02/2019
    
    
    
    345,666
    (8)
    
    
    373,31918,334
    
    
    
    36,666
    (4)
    
    
    1.32
    
    
    
    01/02/2018266,667
    
    
    
    133,333
    
    
    
    2.00
    
    
    
    09/26/2017Mr. Stover
    
    
    
    
    
    
    136,364
    (1)
    
    
    0.54
    
    
    
    01/02/2019
    
    
    
    333,333
    (9)
    
    
    360,00072,667
    
    
    
    145,333
    (2)
    
    
    1.32
    
    
    
    01/02/201850,000
    
    
    
    
    
    
    
    3.51
    
    
    
    01/02/2011100,000
    
    
    
    
    
    
    
    4.20
    
    
    
    01/02/2010Mr. Williams
    
    
    
    
    
    
    181,818
    (1)
    
    
    0.54
    
    
    
    01/02/2019
    
    
    
    370,666
    (10)
    
    
    400,31918,334
    
    
    
    36,666
    (2)
    
    
    1.32
    
    
    
    01/02/2018133,333
    
    
    
    66,666
    (5)
    
    
    1.14
    
    
    
    10/01/2017
 
 (1)
    
    These options vest and become exercisable in three equal annual installments beginning
on January 1, 2010.(2)
    
    These options vest in and become exercisable in equal installments on January 1, 2010
and 2011.(3)
    
    These options vest in and become exercisable in equal installments on November 3, 2010
and 2011.(4)
    
    These options vest and become exercisable on September 26, 2010.(5)
    
    These options vest and become exercisable on October 1, 2010.(6)
    
    83,333 of these restricted stock awards vested on January 1, 2010. 340,000 of these
restricted stock awards vest in two equal annual installments beginning on January 1, 2010.
375,000 of these restricted stock awards vest in three equal annual installments beginning
on January 1, 2010.(7)
    
    133,333 of these restricted stock awards vest in two equal annual installments
beginning on November 3, 2010. 50,000 of these restricted stock awards vest in three equal
annual installments beginning on January 1, 2010.(8)
    
    133,333 of these restricted stock awards vest on September 26, 2010. 37,333 of these
restricted stock awards vest in two equal annual installments beginning on January 1, 2010.
175,000 of these restricted stock awards vest in three equal annual installments beginning
on January 1, 2010.(9)
    
    33,333 of these restricted stock awards vested on January 1, 2010. 150,000 of these
restricted stock awards vest in two equal annual installments beginning on January 1, 2010.
150,000 of these restricted stock awards vest in three equal annual installments beginning
on January 1, 2010.(10)
    
    133,333 of these restricted stock awards vest on October 1, 2010. 37,333 of these
restricted stock awards vest in two equal annual installments beginning on January 1, 2010.
200,000 of these restricted stock awards vest in three equal annual installments beginning
on January 1, 2010. 101




---



##### 



2009 Option Exercises and Stock Vested Table
  Option Awards
    
    Stock AwardsNumber of Shares
    
    
    
    
    
    Number of SharesAcquired on
    
    Value Realized
    
    Acquired on
    
    Value RealizedExercise
    
    on Exercise
    
    Vesting
    
    on VestingName
    
    (#)
    
    ($)
    
    (#)
    
    ($)Mr. Transier
    
    
    
    
    
    
    
    
    
    
    503,333
    
    
    $
    271,800Mr. Grenz
    
    
    
    
    
    
    
    
    
    
    166,667
    
    
    $
    178,334Mr. Kirksey
    
    
    
    
    
    
    
    
    
    
    152,000
    
    
    $
    176,746Mr. Stover
    
    
    
    
    
    
    
    
    
    
    208,333
    
    
    $
    112,500Mr. Williams
    
    
    
    
    
    
    
    
    
    
    152,000
    
    
    $
    156,746
 Risk Assessment Related to our Compensation Structure
  102




---



##### 



2009 Potential Payments upon Termination or Change in Control Table
  Terminationw/o Cause orfor Good
    
    Voluntary
    
    
    
    
    
    
    
    
    
    Change inName
    
    Benefit
    
    Reason
    
    Termination
    
    Death
    
    Disability
    
    ControlMr. TransierSeverance (1)
    
    
    4,800,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,800,000Stock options
(unvested and
accelerated) (2)
    
    
    184,091
    
    
    
    
    
    
    
    184,091
    
    
    
    184,091
    
    
    
    184,091Restricted stock
awards (unvested
and accelerated)
(3)
    
    
    862,200
    
    
    
    
    
    
    
    862,200
    
    
    
    862,200
    
    
    
    862,200Health and welfare
benefits
continuation (1)
    
    
    11,826
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,826Mr. GrenzSeverance (4)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,044,000Stock options
(unvested and
accelerated) (2)
    
    
    24,546
    
    
    
    
    
    
    
    24,546
    
    
    
    24,546
    
    
    
    24,546Restricted stock
awards (unvested
and accelerated)
(3)
    
    
    198,000
    
    
    
    
    
    
    
    198,000
    
    
    
    198,000
    
    
    
    198,000Health and welfare
benefits
continuation (4)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Mr. KirkseySeverance (4)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,105,000Stock options
(unvested and
accelerated) (2)
    
    
    85,909
    
    
    
    
    
    
    
    85,909
    
    
    
    85,909
    
    
    
    85,909Restricted stock
awards (unvested
and accelerated)
(3)
    
    
    373,319
    
    
    
    
    
    
    
    373,319
    
    
    
    373,319
    
    
    
    373,319Health and welfare
benefits
continuation (4)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,754Mr. StoverSeverance (4)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,203,333Stock options
(unvested and
accelerated) (2)
    
    
    73,637
    
    
    
    
    
    
    
    73,637
    
    
    
    73,637
    
    
    
    73,637Restricted stock
awards (unvested
and accelerated)
(3)
    
    
    360,000
    
    
    
    
    
    
    
    360,000
    
    
    
    360,000
    
    
    
    360,000Health and welfare
benefits
continuation (4)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,034Mr. WilliamsSeverance (4)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,168,333Stock options
(unvested and
accelerated) (2)
    
    
    98,182
    
    
    
    
    
    
    
    98,182
    
    
    
    98,182
    
    
    
    98,182Restricted stock
awards (unvested
and accelerated)
(3)
    
    
    400,319
    
    
    
    
    
    
    
    400,319
    
    
    
    400,319
    
    
    
    400,319Health and welfare
benefits
continuation (4)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 103




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##### 



(1)
    
    Pursuant to Mr. Transiers employment agreement, Mr. Transier would receive (i) a
payment of three times the sum of his annual salary and his average bonus for the last two
years and (ii) the standard health and welfare benefits available to our employees for
three years following a change in control. The amount for the health and welfare benefits
is estimated based on health and welfare benefit costs for 2009.(2)
    
    Calculated as the in-the-money value of unvested stock options as of December 31, 2009.(3)
    
    Calculated as the value of unvested restricted stock awards as of December 31, 2009.(4)
    
    Pursuant to change in control termination benefits agreements, each executive vice
president would receive (i) a payment of two times the sum of his annual salary and his
average bonus for the last three years and (ii) the standard health and welfare benefits
available to our employees for 18 months following a change in control. Such benefits are
payable only upon termination, as defined, upon a change in control. The amount for the
health and welfare benefits is estimated based on health and welfare benefit costs for
2009. Employment, Change in Control and Severance Agreements
 Chief Executive Officer
     Other Executive Officers
  104




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##### 




    
    An amount equal to two times his annual base salary;
    
    An amount equal to two times the executives average bonus for the prior three years in
which the date of termination occurs;
    
    A pro rata portion of his annual target bonus for the year in which such termination
occurs; and
    
    Continuation of health benefits for a period of 18 months following the date of
termination, with Endeavour continuing to pay the same portion of the premiums as it does
for current employees.
  Equity Compensation Plan Information
  Number ofsecuritiesremainingavailable forNumber of
    
    Weighted-
    
    future issuancesecurities to be
    
    average
    
    under equityissued upon
    
    exercise price
    
    compensationexercise of
    
    of outstanding
    
    plans (excludingoutstanding
    
    options,
    
    securitiesoptions, warrants
    
    warrants and
    
    reflected inand rights
    
    rights
    
    column (a))(a)
    
    (b)
    
    (c)Equity
compensation plans
approved by
security holders
    
    
    3,361,522
    
    
    
    1.98
    
    
    
    6,178,962Equity compensation
plans not approved
by security holders
    
    
    850,000
    
    
    
    1.43
    
    
    
    Total
    
    
    4,211,522
    
    
    
    1.87
    
    
    
    6,178,962
 105




---



##### 



Compensation Committee Report on Executive Compensation
  
 106




---



##### 



Endeavour International Corporation
 
 Part IV
 
 Item 15. Exhibits and Financial Statement Schedules
       107




---



##### 



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

J. Michael KirkseyExecutive Vice President and Chief Financial Officer
 
  
 
 
 108




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##### 



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).
 109




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##### 



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 (Incorporated by reference to Exhibit 3.6(c) to our Annual Report on Form 10-K (Commission File No.
001-32212) for the year ended December 31, 2009).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).
 
 110




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##### 



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. 001-32212) 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 (Incorporated by reference to Exhibit 10.7 to our Annual Report on Form 10-K (Commission File
No. 001-32212) for the year ended December 31, 2009).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.)
 
 111




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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 (Incorporated by reference to Exhibit 10.13(c) to our Annual Report on Form 10-K (Commission
File No. 001-32212) for the year ended December 31, 2009).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).
 
 112




---



##### 



Endeavour International Corporation
 Exhibit Index
 
 Exhibit
    
    Description10.15(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 (Incorporated by reference to Exhibit 10.15(b) to our Annual Report on Form 10-K (Commission
File No. 001-32212) for the year ended December 31, 2009).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).
 
 113




---



##### 



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 (Incorporated by reference to Exhibit 10.26(b) to our Annual Report on Form 10-K (Commission File
No. 001-32212) for the year ended December 31, 2009).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 (Incorporated by reference to Exhibit 12.1 to our Annual Report on Form 10-K (Commission File No.
001-32212) for the year ended December 31, 2009).12.2
    
    Computation of Ratios of Earnings to Fixed Charges and Preference
Securities Dividends (Incorporated by reference to Exhibit 12.2 to our Annual Report on Form 10-K (Commission File No.
001-32212) for the year ended December 31, 2009).21.1
    
    List of Subsidiaries (Incorporated by reference to Exhibit 21.1 to our Annual Report on Form 10-K (Commission File No.
001-32212) for the year ended December 31, 2009).23.1
    
    Consent of Independent Registered
Public Accounting Firm  KPMG LLP (Incorporated by reference to Exhibit 23.1 to our Annual Report on Form 10-K (Commission File No.
001-32212) for the year ended December 31, 2009).23.2
    
    Consent of Independent Reserve Engineers  Netherland, Sewell &
Associates, Inc. (Incorporated by reference to Exhibit 23.2 to our Annual Report on Form 10-K (Commission File No.
001-32212) for the year ended December 31, 2009).*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.
 
 114




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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 (Incorporated by reference to Exhibit 99.1 to our Annual Report on Form 10-K (Commission File No.
001-32212) for the year ended December 31, 2009).
 
 
 *
    
    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. 115