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United States Securities and Exchange Commission
 Washington, D.C. 20549
 Form 10-K
 þ
    
    Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the Fiscal Year Ended December 31, 2005
 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
    
    (I.R.S. Employer Identification No.)organization)
 
 (713) 307-8700
 
  Title of Each Class of Stock
    
    Name of Each Exchange on Which RegisteredCommon Stock - $0.001 par value per share
    
    American Stock Exchange
  o þ
 o þ
 þ o
 o
 o þ o
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE:




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##### 



Table of Contents
 Part I
    
    
    1Item 1. Business
    
    
    1Item 1A. Risk Factors
    
    
    8Item 1B. Unresolved Staff Comments
    
    
    15Item 2. Properties
    
    
    16Item 3. Legal Proceedings
    
    
    29Item 4. Submission of Matters to a Vote of Security Holders
    
    
    29Part II
    
    
    29Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    29Item 6. Selected Financial Data
    
    
    31Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    31Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    42Item 8. Financial Statements and Supplementary Data
    
    
    44Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
    
    
    91Item 9A. Controls and Procedures.
    
    
    91Item 9B. Other Information
    
    
    94Part III
    
    
    94Item 10. Directors and Executive Officers of the Registrant
    
    
    94Item 11. Executive Compensation
    
    
    94Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
    
    
    94Item 13. Certain Relationships and Related Transactions
    
    
    94Item 14. Principal Accounting Fees and Services
    
    
    95Part IV
    
    
    95Item 15. Exhibits and Financial Statement Schedules
    
    
    95List of SubsidiariesConsent of KPMG LLPConsent of LJ Soldinger Associates LLPConsent of Gaffney, Cline & Associates LtdCertificate of Co-CEO Pursuant to Rule 13a-14(a)Certificate of Co-CEO Pursuant to Rule 13a-14(a)Certificate of CAO Pursuant to Rule 13a-14(a)Certificate of CAO Pursuant to Rule 13a-14(a)Certificate of Co-CEO Pursuant to Section 1350Certificate of Co-CEO Pursuant to Section 1350Certificate of CFO Pursuant to Section 1350Certificate of CAO Pursuant to Section 1350
  (i)




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Endeavour International Corporation
 Forward-Looking Statements
  
 Part I
 
 Item 1. Business
    1




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Endeavour International Corporation
 General
 nd
 2005 and 2004 Highlights
 Holland MegaSurvey Holland MegaSurvey
    2




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Endeavour International Corporation
     
    
    a new management team;
    
    a new business strategy of exploration, exploitation and acquisition focused on the
North Sea;
    
    the acquisition of NSNV, Inc. which possessed the seismic data and management team
that were central to the Companys new strategy; and
    
    a restructuring which resulted in the sale of all our interests in U.S. oil and gas
properties.
 nd
    3




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Endeavour International Corporation
 Other matters
  Business Strategy
  North Sea Digital Atlas,
  4




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Endeavour International Corporation
  United Kingdom Opportunity
 3D MegaSurvey nd rd 3D
MegaSurvey
 Norway Opportunity
  Netherlands Opportunity
 Holland MegaSurvey
 Other Opportunities
  5




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Endeavour International Corporation
 Technical Strategy
  Segment and Geographical Data
  Executive Officers
 Name
    
    Age
    
    Positions HeldWilliam L. Transier
    
    
    51
    
    
    Co-Chief Executive Officer and Director of
the Company since February 2004; From 1999 to
2003, Executive Vice President and Chief
Financial Officer for Ocean Energy, Inc.
prior to its merger with Devon Energy
CorporationJohn N. Seitz
    
    
    54
    
    
    Co-Chief Executive Officer and Director of
the Company since February 2004; January 2002
to March 2003, Chief Executive Officer, Chief
Operating Officer and President of Anadarko
Petroleum Corporation; President and Chief
Operating Officer from 1999 to 2003 of
Anadarko Petroleum CorporationLance Gilliland
    
    
    38
    
    
    Executive Vice President, Chief Financial
Officer of the Company since September 2005;
From 1993 to 2005, various positions at
Goldman, Sachs & Co., serving in both the
mergers and acquisitions and investment
banking services departmentsBruce H. Stover
    
    
    57
    
    
    Executive Vice President Operations and
Business Development of the Company since
February 2004; From 1997 to 2003, Senior Vice
President, Worldwide Business Development for
Anadarko Petroleum CorporationH. Don Teague
    
    
    63
    
    
    Executive Vice President, Administration,
General Counsel and Secretary of the Company
since March 2004; From 2001 to 2004, an
independent consultantRobert L. Thompson
    
    
    59
    
    
    Vice President, Chief Accounting Officer and
Corporate Planning of the Company since March
2004; From 2001 to 2003, Vice President and
Controller of Ocean Energy, Inc.; From 2000
to 2001, senior consultant on finance and
economics at Cambridge Energy Research
Associates
 Competition
  6




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Endeavour International Corporation
   Regulation
    Environmental
  7




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Endeavour International Corporation
    Operational Hazards and Insurance
   Employees
  
 Item 1A. Risk Factors
  8




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Endeavour International Corporation
 We have had operating losses to date and do not expect to be profitable in the foreseeable future.
  If we are unable to generate additional financing, we will not be able to adequately fund our
existing development and exploration projects, acquire additional oil and gas interests, or
maintain our rights in such projects.
  Acquiring interests in properties for oil and natural gas exploration is speculative in nature and
may not ever result in operating revenues or profits.
  If we are unable to identify additional oil and gas prospects in which we can acquire an interest
at an affordable price, we may not be able to sustain our growth rate and our ability to spread
risk will be impaired.
  
    
    we may not be able to identify additional desirable oil and gas prospects and
acquire leasehold or other ownership interests in such prospects at a desirable price;
    
    any of our completed, currently planned, or future acquisitions of ownership
interests in oil and gas prospects may not include prospects that contain proven oil or
gas reserves;
    
    we may not have the ability to develop prospects that contain proven oil or gas
reserves to the point of commercial production;
 9




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Endeavour International Corporation
 
    
    we may not have the financial ability to consummate additional acquisitions of
ownership interests in oil and gas prospects or to develop the prospects that we
acquire to the point of production; and
    
    we may not be able to consummate additional acquisitions on terms favorable to us or
at all.
 We may not be able to replace production with new reserves.
   
    
    our estimates of recoverable reserves;
    
    future oil and gas prices;
    
    operating costs; and
    
    potential environmental and other liabilities.
  Market fluctuations in the prices of oil and gas could adversely affect the price at which we can
sell oil or gas discovered on our properties.
  Lower oil and gas prices may cause us to record ceiling test write-downs.
  10




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Endeavour International Corporation
  Our ability to produce sufficient quantities of oil and gas from our properties may be adversely
affected by factors outside of our control. If we are unable to produce oil and gas from our
properties in commercial quantities, our operations will be severely affected.
  We operate in foreign countries and are subject to political, economic and other uncertainties.
  
    
    the risk of war, acts of terrorism, revolution, border disputes, expropriation,
renegotiation or modification of existing contracts, and import, export and
transportation regulations and tariffs;
    
    taxation policies, including royalty and tax increases and retroactive tax claims;
    
    exchange controls, currency fluctuations and other uncertainties arising out of
foreign government sovereignty over our international operations;
    
    laws and policies of the U.S. affecting foreign trade, taxation and investment; and
    
    the possibility of being subject to the exclusive jurisdiction of foreign courts in
connection with legal disputes and the possible inability to subject foreign persons to
the jurisdiction of courts in the United States.
  11




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Endeavour International Corporation
  If the operator of a prospect in which we participate does not maintain or fails to obtain adequate
insurance, our interest in such prospect could be materially and adversely affected.
   The cost of decommissioning is uncertain.
  Our cost of compliance with environmental regulations could result in large expenses.
   12




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Endeavour International Corporation
 Governmental regulations to which we are subject could expose us to significant fines and/or
penalties and our cost of compliance with such regulations could be substantial.
  We are dependent on our executive officers and need to attract and retain additional qualified
personnel.
   The trading price of our common stock may be volatile.
  There is a limited market for our common stock.
  If we are unable to fulfill commitments under any of our licenses, we will lose our interest, and
our entire investment, in such license.
  13




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Endeavour International Corporation
 Our operations are dependent on other companies and other service providers over which we have no
control.
  We have no control over the availability or cost of equipment and services which are essential to
our operations.
  Our debt level could negatively impact our financial condition, results of operations and business
prospects.
  
    
    making it more difficult for us to satisfy our obligations under our indentures or
other debt and increasing the risk that we may default on our debt obligations;
    
    requiring us to dedicate a substantial portion of our cash flow from operating
activities to required payments on debt, thereby reducing the availability of cash flow
for working capital, capital expenditures and other general business activities;
    
    limiting our ability to obtain additional financing in the future for working
capital, capital expenditures, acquisitions and other general business activities;
    
    decreasing our ability to successfully withstand a downturn in our business or the
economy generally; and
    
    placing us at a competitive disadvantage against other less leveraged competitors.
   14




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Endeavour International Corporation
   Because we are a holding company, our ability to pay our debts depends upon the ability of our
subsidiaries to pay us dividends and to advance us funds. In addition, our ability to participate
in any distribution of our subsidiaries assets is generally subject to the prior claims of the
subsidiaries creditors.
  
 Item 1B. Unresolved Staff Comments
  15




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Endeavour International Corporation
 
 Item 2. Properties
 Regional Endeavour Acreage
 
 16




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Endeavour International Corporation
 United Kingdom
  P1399 (12/26b, 12/27, 17/5b, 18/1a, and 18/2a)  33.3% working interest and Operator
 rd
 P1397 (12/23a)  33.3% working interest and Operator
 rd
 P1297 (15/12a)  100% working interest and Operator
 rd
 P219 (16/13a Enoch)  8% working interest (pending)
  P1176 (20/15b & 21/11c)  100% working interest and Operator
  17




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Endeavour International Corporation
 nd
 P1219 (21/20c)  100% working interest and Operator
 nd
 P1313 (22/20b)  25% working interest
  P1222 (22/24e)  60% working interest and Operator
 rd
 P1051 (23/11(N))  20% working interest
  P1314 (23/16f)  50% working interest
 rd
 P1180 (23/16e & 23/17b)  47.5% working interest
  18




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Endeavour International Corporation
 nd
 P1321 (30/1g)  25% working interest
 rd
 P1228 (30/23b)  60% working interest and Operator
 rd
 P1323 (31/21b)  40% working interest and Operator
 rd
 P1324 (31/27b)  40% working interest and Operator
 rd
 P1183 (31/26b & 39/1b)  40% working interest (Turnberry), 60% working interest (Turriff) and
Operator
 nd
 19




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Endeavour International Corporation
 P1229 (42/10 & 42/15)  50% working interest
 nd
 P1132 (42/21 & 42/22)  22.5% working interest
 st
 P1235 (43/22b, 43/23a, 43/27b, 43/28, 43/29)  25% working interest
 nd
 P1339 (43/23b)  50% working interest and Operator
 rd
 P1343 (43/30b, 48/5a & 49/1b)  33% working interest
 rd
 P1055 (44/11 & 44/12)  12.5% working interest
 th
 20




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Endeavour International Corporation
  P1184 (44/21c & 44/26b)  25% working interest
 nd
 P1242 (48/1a)  30% working interest on an option to farm-in
  P1356 (48/8c)  100% working interest and Operator
 rd
 21




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Endeavour International Corporation
 
 22




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Endeavour International Corporation
 
 Norway
  
    
    a 4.4% working interest in the Brage field; and
    
    a 2.5% working interest in the Njord field.
  PL354 (1/9, 2/7, 2/10 and 2/11)  50% working interest and Operator
  23




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Endeavour International Corporation
  PL363 (25/5)  40% working interest
  PL347 (6407/7, 6407/8, 6407/10 and 6407/11)  7.5% working interest
  PL348 (6407/8 and 6407/9)  7.5% working interest
  PL270 (35/3 Agat)  49% working interest
  24




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Endeavour International Corporation
 
 Planned Exploration and Development Expenditures
  25




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Endeavour International Corporation
  Reserves
  Oil
    
    Gas
    
    Oil Equivalents(MBbls)
    
    (MMcf)
    
    (MBOE)2005:Norway
    
    
    1,164
    
    
    
    6,297
    
    
    
    2,2142004:Norway
    
    
    1,543
    
    
    
    6,725
    
    
    
    2,664Equity Interest in Entities
with Oil and Gas Properties
(Thailand)
    
    
    75
    
    
    
    25,006
    
    
    
    4,2432003:United States
    
    
    
    
    
    
    52
    
    
    
    9
 Drilling Statistics
  26




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Endeavour International Corporation
 Productive Wells
    
    Dry Holes
    
    In Progress WellsGross
    
    Net
    
    Gross
    
    Net
    
    Gross
    
    Net2005:United Kingdom
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    1.5
    
    
    
    
    
    
    
    Norway
    
    
    2
    
    
    
    0.07
    
    
    
    1
    
    
    
    0.03
    
    
    
    1
    
    
    
    0.032004:Norway
    
    
    1
    
    
    
    0.03
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    0.07Equity Interest
in Entities
with Oil and
Gas Properties
(Thailand)
    
    
    2
    
    
    
    0.14
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
  Sales Volumes and Prices
  27




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Endeavour International Corporation
 Year Ended December 31,2005
    
    2004
    
    2003Norway:Oil and condensate sales (Mbbl)
    
    
    726
    
    
    
    91
    
    
    
    Oil and condensate price ($  per Bbl)
    
    
    51.93
    
    
    
    40.28
    
    
    
    Gas sales (MMcf)
    
    
    184
    
    
    
    15
    
    
    
    Gas price ($  per Mcf)
    
    
    6.06
    
    
    
    0.66
    
    
    
    Operating costs ($  per BOE)
    
    
    15.86
    
    
    
    22.15
    
    
    
    United States:Gas sales (MMcf)
    
    
    
    
    
    
    2
    
    
    
    8Gas price ($  per Mcf)
    
    
    
    
    
    
    4.45
    
    
    
    3.37Operating costs ($  per BOE)
    
    
    
    
    
    
    0.80
    
    
    
    0.54Total:Oil and condensate sales (Mbbl)
    
    
    726
    
    
    
    91
    
    
    
    Oil and condensate price ($  per Bbl)
    
    
    51.93
    
    
    
    40.28
    
    
    
    Gas sales (MMcf)
    
    
    184
    
    
    
    17
    
    
    
    8Gas price ($  per Mcf)
    
    
    6.06
    
    
    
    1.06
    
    
    
    3.37Operating costs ($  per BOE)
    
    
    15.86
    
    
    
    22.17
    
    
    
    0.54
 Productive Well Summary
  Oil
    
    GasGross
    
    Net
    
    Gross
    
    NetNorway
    
    
    26
    
    
    
    0.99
    
    
    
    
    
    
    
    
 Undeveloped Acreage
  28




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Endeavour International Corporation
 Developed
    
    UndevelopedGross
    
    Net
    
    Gross
    
    NetUnited Kingdom
    
    
    
    
    
    
    
    
    
    
    1,211,951
    
    
    
    518,269Norway
    
    
    74,356
    
    
    
    2,498
    
    
    
    393,133
    
    
    
    130,073Total North Sea
    
    
    74,356
    
    
    
    2,498
    
    
    
    1,605,084
    
    
    
    648,342
 
 Item 3. Legal Proceedings
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Part II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
  2005
    
    2004High
    
    Low
    
    High
    
    LowFirst Quarter
    
    $
    4.29
    
    
    $
    3.35
    
    
    $
    5.10
    
    
    $
    2.18Second Quarter
    
    
    3.90
    
    
    
    2.94
    
    
    
    4.35
    
    
    
    3.35Third Quarter
    
    
    5.69
    
    
    
    3.62
    
    
    
    3.50
    
    
    
    2.55Fourth Quarter
    
    
    5.02
    
    
    
    3.22
    
    
    
    4.55
    
    
    
    3.22
 29




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Endeavour International Corporation
 Holders
  Dividends
  Securities Authorized for Issuances Under Equity Compensation Plans
  Equity Compensation Plan Information
 Number ofsecuritiesremainingNumber of
    
    
    
    
    
    available forsecurities to be
    
    Weighted-
    
    future issuanceissued upon
    
    average exercise
    
    under equityexercise of
    
    price of
    
    compensationoutstanding
    
    outstanding
    
    plans (excludingoptions,
    
    options,
    
    securitieswarrants and
    
    warrants and
    
    reflected inrights
    
    rights
    
    column (a))(a)
    
    (b)
    
    (c)Equity compensation
plans approved by
security holders
    
    
    3,117,000
    
    
    $
    2.92
    
    
    
    3,951,943Equity compensation
plans not approved
by security holders
    
    
    1,170,000
    
    
    $
    3.39
    
    
    
    Total
    
    
    4,287,000
    
    
    $
    3.05
    
    
    
    3,951,943
  30




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Endeavour International Corporation
  
 Item 6. Selected Financial Data
  Selected Financial Data(1)(Amounts in thousands, except per share data)
    
    Year Ended December 31,2005
    
    2004
    
    2003
    
    2002
    
    2001Revenues
    
    $
    38,656
    
    
    $
    3,663
    
    
    $
    27
    
    
    $
    16
    
    
    $
    Net Loss
    
    
    (31,531
    )
    
    
    (23,372
    )
    
    
    (36,829
    )
    
    
    (4,487
    )
    
    
    (68
    )Net Loss Per Common Share  Basic and Diluted
    
    
    (0.42
    )
    
    
    (0.37
    )
    
    
    (1.18
    )
    
    
    (0.24
    )
    
    
    (0.06
    )Summary Balance Sheet Data:Total Assets
    
    
    186,966
    
    
    
    101,737
    
    
    
    12,582
    
    
    
    25,019
    
    
    
    54Long-term Debt
    
    
    81,250
    
    
    
    2,150
    
    
    
    
    
    
    
    
    
    
    
    
  (1)
    
    Includes the following acquisitions and dispositions: 
    
    disposition of Thailand assets in 2005;
    
    acquisition of OER in November 2004 and January 2005;
    
    disposition of BWP, Knox Miss and La. Shelf in 2004;
    
    acquisition of NSNV in 2004;
    
    acquisition of BWP in 2003; and
    
    disposition of CSR-Waha in 2003.
 
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
 RISK FACTORS
 31




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Endeavour International Corporation
 Overview
 nd
 Acquisitions
 
    
    The acquisition of the 76.66% majority interest in OER was completed in November 2004
for approximately $27.6 million, plus $0.8 million in professional expenses for legal and
accounting services.
    
    The acquisition of the remaining 23.34% minority interest was completed in January 2005
for an aggregate consideration paid of $10.7 million, approximately $1.4 million in cash
and 2,183,617 shares of our common stock.
    
    The NSNV Acquisition was completed in February 2004. As the NSNV Acquisition was
accounted for as a purchase of assets and not a business combination, the consideration
given was allocated to the fair value of the identifiable assets and liabilities acquired
with the excess of $10.8 million expensed.
    
    In the second quarter of 2003, our predecessor company, CSOR, purchased a partnership
with interests in certain oil and gas activities in Oklahoma through the issuance of 3.3
million shares of common stock, warrants to purchase 1.7 million common shares at an
exercise price of $2.00 per share expiring in three years and $2.7 million in cash. These
partnership interests were sold during our restructuring in 2004.
 Dispositions
 
    
    The sale of our partnership interests in Thailand to a private entity for net proceeds
of approximately $19 million was completed in the second quarter of 2005. We recorded a
gain on the sale of these interests of approximately $15 million.
    
    The sale of all of our equity interest in Louisiana Shelf Partners, L.P. (La. Shelf)
was completed in the second quarter of 2005 for $250,000 in cash and a $2 million
contingent deferred payment that is payable from proceeds from production of drilling
activities on the oil and gas leases held by La. Shelf. We recorded a loss on the sale of
these interests of approximately $0.9 million.
    
    The sale of our entire limited partnership interests in partnership with interests in
certain oil and gas leases located in Mississippi was completed in the first quarter of
2004 for $5.0 million. We recorded a gain on the sale of these interests of approximately
$1.3 million.
    
    The sale of our entire limited partnership interest in CSR-Waha Partners, LP was
completed in January 2003 by our predecessor company for $0.2 million cash and a $1.5
million promissory note and 0.6 million shares of common stock of the purchaser. The
promissory note was sold during our restructuring in 2004.
 Financing
 
    
    We issued 25 million shares of common stock at $2.00 per share in a private placement in
February 2004 for estimated net proceeds of $46 million after deduction of offering
expenses.
    
    Simultaneous with the consummation of the NSNV Acquisition and the offering of 25
million shares of common stock, we restructured our non-core assets, debt and equity by
repaying, converting or repurchasing all outstanding debt and nearly all outstanding
preferred stock.
    
    We issued $81.25 million aggregate principal amount of 6.00% convertible senior notes
due 2012 in a private placement during the first quarter of 2005.
 Operations
 
    
    With the completion of the OER Acquisition in November 2004, we had our first reserves
and revenues from properties in the North Sea. 2005 represents the first full-year
contribution of these assets.
 32




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Endeavour International Corporation
 
    
    During the third quarter of 2005, we began drilling on the first wells in our ongoing
exploration campaign. By the end of 2005, we had determined that each of the four wells
drilled in the UK area of the North Sea were unsuccessful and recorded $27.1 million in
impairments. We expect to incur additional costs of approximately $0.6 million in 2006
that will be expensed in the first quarter of 2006 related to these wells.
    
    Our predecessor company drilled three wells, two of which were unsuccessful, in the
United States during 2003. As a result of the unsuccessful drilling, we recorded $25.2
million in impairment. All domestic properties were sold during our restructuring in 2004.
 Results of Operations
 Revenues
  Bad Debt Expense
  General and Administrative Expenses
  33




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Endeavour International Corporation
 (Amounts in thousands)
    
    Year Ended December 31,2005
    
    2004
    
    2003Compensation
    
    $
    9,742
    
    
    $
    4,544
    
    
    $
    168Consulting, legal and accounting fees
    
    
    5,235
    
    
    
    2,893
    
    
    
    1,540Occupancy costs
    
    
    1,070
    
    
    
    439
    
    
    
    19Other expenses
    
    
    2,273
    
    
    
    2,057
    
    
    
    534Total gross cash G&A expenses
    
    
    18,320
    
    
    
    9,933
    
    
    
    2,261Non-cash stock-based compensation
    
    
    7,908
    
    
    
    7,995
    
    
    
    Fair market value adjustment of stock options  non-cash
    
    
    (555
    )
    
    
    1,183
    
    
    
    Total gross non-cash G&A expenses
    
    
    7,353
    
    
    
    9,178
    
    
    
    Gross G&A expenses
    
    
    25,673
    
    
    
    19,111
    
    
    
    2,261Less: capitalized G&A expenses
    
    
    (7,450
    )
    
    
    (4,403
    )
    
    
    Net G&A expenses
    
    $
    18,223
    
    
    $
    14,708
    
    
    $
    2,261
 Other (Income) and Expense
    Income Taxes
  34




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##### Table of Contents



Endeavour International Corporation
 Liquidity and Capital Resources
 (Amounts in thousands)
    
    December 31, 2005
    
    December 31, 2004Net working capital
    
    $
    49,638
    
    
    $
    4,699Long-term debt
    
    $
    81,250
    
    
    $
    2,150
 Year Ended December 31,(Amounts in thousands)
    
    2005
    
    2004
    
    2003Net cash provided by (used in):Operating activities
    
    $
    27,962
    
    
    $
    6,918
    
    
    $
    (3,179
    )Investing activities
    
    $
    (34,972
    )
    
    $
    (35,233
    )
    
    $
    (7,475
    )Financing activities
    
    $
    75,411
    
    
    $
    36,487
    
    
    $
    10,381
  
    
    in January 2005, we purchased the remaining minority interest in OER for an aggregate
consideration paid of $10.7 million, which was approximately $1.4 million in cash and
2,183,617 shares of our common stock;
    
    in the first quarter of 2005, we completed the issuance of $81.25 million in senior
convertible notes due 2012;
    
    in November 2004, we purchased OER for $27.6 million in cash;
    
    in February 2004, we issued 25 million shares of common stock and 0.7 million warrants
at an exercise price of $2.00 per share for net proceeds of $46 million;
    
    in February 2004, we funded the purchase of NSNV through the issuance of 12.5 million
            shares of common stock;
    
    during 2004 and 2003, we issued 1.8 million shares of our common stock to RAM for $2.2
million;
    
    between May and July 2003, we issued 477,500 shares of Series C Convertible Preferred
Stock for $10.00 per share for gross proceeds of $4.8 million;
    
    in May 2003, we funded the purchases of BWP through the issuance of 3.3 million shares
of common stock and 1.7 million warrants at an exercise price of $2.00 per share expiring
in three years; and
    
    in July 2003, we increased the principal amount of the promissory note to Trident to
$2.1 million and extended the maturity date to July 31, 2004.
 Outlook
 Anticipated Capital Expenditures
  35




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##### Table of Contents



Endeavour International Corporation
    Liquidity and Financial Resources
  Critical Accounting Policies and Estimates
    36




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##### Table of Contents



Endeavour International Corporation
 Full Cost Accounting
      37




---



##### Table of Contents



Endeavour International Corporation
  Dismantlement, Restoration and Environmental Costs
  Revenue Recognition
  Derivative Instruments and Hedging Activities
    38




---



##### Table of Contents



Endeavour International Corporation
  Income Taxes
  Stock-Based Compensation Arrangements
  Recent Accounting Pronouncements
    39




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##### Table of Contents



Endeavour International Corporation
  Disclosures about Contractual Obligations and Commercial Commitments
  (Amounts in thousands)
    
    Payments due by PeriodContractual Obligations
    
    Total
    
    1 Year
    
    2-3 Years
    
    4-5 Years
    
    After 5 YearsLong-term debt
    
    $
    81,250
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    81,250Operating leases for
office leases and
equipment
    
    
    301
    
    
    
    262
    
    
    
    39
    
    
    
    
    
    
    
    Office leases
    
    
    1,211
    
    
    
    451
    
    
    
    723
    
    
    
    37
    
    
    
    Rig commitments
    
    
    13,500
    
    
    
    13,500
    
    
    
    
    
    
    
    
    
    
    
    Purchase commitment  PGS
    
    
    54
    
    
    
    54
    
    
    
    
    
    
    
    
    
    
    
    Total
Contractual Cash Obligations
    
    $
    96,316
    
    
    $
    14,267
    
    
    $
    762
    
    
    $
    37
    
    
    $
    81,250
  Commonly Used Oil and Gas Terms
  Basis risk 
 Bbl 
 BOE 
 BOPD 
 BOEPD 
 Completion 
 40




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##### Table of Contents



Endeavour International Corporation
 Developed acreage 
 Development well 
 Dry hole or well 
 Exploration or exploratory well 
 Farm-in or farm-out 
 FPSO 
 Field 
 Gas lift 
 Gross acres or gross wells 
 In progress wells 
 MBbls 
 MBOE 
 Mcf 
 MMcf 
 Net acres or net wells 
 Productive well 
 41




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##### Table of Contents



Endeavour International Corporation
 Prospect 
 Proved developed producing reserves 
 Proved developed reserves 
 Proved developed nonproducing reserves 
 Proved reserves 
 Proved undeveloped reserves 
 Reservoir 
 Undeveloped acreage 
 Working interest 
 Workover 
 
 Item 7A. Quantitative and Qualitative Disclosures About Market Risk
 Foreign Exchange Risk
  42




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##### Table of Contents



Endeavour International Corporation
 Commodity Price Risk
   Interest Rate Risk
  43




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##### Table of Contents



Item 8. Financial Statements and Supplementary Data
 Report of Independent Registered Public Accounting Firm
 
      
 44




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
    Reporting a Change in Accounting Principle
  
 45




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##### Table of Contents



Endeavour International Corporation
Consolidated Balance Sheets
  December 31,2005
    
    2004AssetsCurrent Assets:Cash and cash equivalents
    
    $
    76,127
    
    
    $
    8,975Accounts receivable
    
    
    4,876
    
    
    
    4,286Prepaid expenses and other current assets
    
    
    8,070
    
    
    
    3,814Total Current Assets
    
    
    89,073
    
    
    
    17,075Equity Interests in Entities with Oil and Gas Properties
    
    
    
    
    
    
    3,688Property and Equipment, Net (Notes 2 and 7)
    
    
    59,084
    
    
    
    50,228Goodwill
    
    
    27,795
    
    
    
    20,119Other Assets
    
    
    11,014
    
    
    
    10,627Total Assets
    
    $
    186,966
    
    
    $
    101,737Liabilities and Stockholders EquityCurrent Liabilities:Accounts payable
    
    $
    18,194
    
    
    $
    2,909Current portion of long-term debt
    
    
    
    
    
    
    2,138Accrued expenses and other
    
    
    21,240
    
    
    
    7,329Total Current Liabilities
    
    
    39,434
    
    
    
    12,376Long-Term Debt
    
    
    81,250
    
    
    
    2,150Deferred Taxes
    
    
    19,185
    
    
    
    18,012Other Liabilities
    
    
    6,753
    
    
    
    8,979Total Liabilities
    
    
    146,622
    
    
    
    41,517Minority Interest
    
    
    
    
    
    
    3,248Commitments and ContingenciesStockholders Equity:Preferred stock (Liquidation preference: $2,458)
    
    
    
    
    
    
    Common stock; shares issued and outstanding 75,489,052 at 2005 and 69,995,165 shares at 2004
    
    
    75
    
    
    
    70Additional paid-in capital
    
    
    155,734
    
    
    
    133,919Accumulated other comprehensive loss
    
    
    (4,578
    )
    
    
    (528
    )Deferred compensation
    
    
    (9,437
    )
    
    
    (6,570
    )Accumulated deficit
    
    
    (101,450
    )
    
    
    (69,919
    )Total Stockholders Equity
    
    
    40,344
    
    
    
    56,972Total Liabilities and Stockholders Equity
    
    $
    186,966
    
    
    $
    101,737
  46




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##### Table of Contents



Endeavour International Corporation
Consolidated Statements of Operations
  For the Year Ended December 31,2005
    
    2004
    
    2003Revenues
    
    $
    38,656
    
    
    $
    3,663
    
    
    $
    27Expenses:Operating expenses
    
    
    11,990
    
    
    
    2,066
    
    
    
    6Depreciation, depletion and amortization
    
    
    9,337
    
    
    
    2,180
    
    
    
    1,497Impairment of oil and gas properties
    
    
    27,116
    
    
    
    
    
    
    
    25,168Bad debt expense  related party
    
    
    
    
    
    
    
    
    
    
    1,800Equity loss from entities with oil and gas
properties
    
    
    79
    
    
    
    201
    
    
    
    1,217General and administrative
    
    
    18,223
    
    
    
    14,708
    
    
    
    2,132General and administrative  related party
    
    
    
    
    
    
    
    
    
    
    129Total expenses
    
    
    66,745
    
    
    
    19,155
    
    
    
    31,949Loss From Operations
    
    
    (28,089
    )
    
    
    (15,492
    )
    
    
    (31,922
    )Other (Income) Expense:Consideration given in excess of fair market
value of assets acquired
    
    
    
    
    
    
    10,779
    
    
    
    Interest expense
    
    
    4,322
    
    
    
    295
    
    
    
    3,570Interest income
    
    
    (2,605
    )
    
    
    (536
    )
    
    
    (240
    )Litigation settlement expense
    
    
    5,265
    
    
    
    
    
    
    
    Gain on sale of oil and gas assets
    
    
    (14,966
    )
    
    
    (355
    )
    
    
    Loss on marketable securities  related party
    
    
    
    
    
    
    207
    
    
    
    1,659Gain on collection of promissory notes
    
    
    
    
    
    
    (1,848
    )
    
    
    Other
    
    
    (263
    )
    
    
    (1,210
    )
    
    
    Total Other Expense
    
    
    (8,247
    )
    
    
    7,332
    
    
    
    4,989Loss Before Minority Interest
    
    
    (19,842
    )
    
    
    (22,824
    )
    
    
    (36,911
    )Minority Interest
    
    
    (470
    )
    
    
    122
    
    
    
    82Loss Before Income Taxes
    
    
    (20,312
    )
    
    
    (22,702
    )
    
    
    (36,829
    )Income Tax Expense
    
    
    11,061
    
    
    
    670
    
    
    
    Net Loss
    
    
    (31,373
    )
    
    
    (23,372
    )
    
    
    (36,829
    )Preferred Stock Dividends
    
    
    (158
    )
    
    
    (425
    )
    
    
    (4,406
    )Net Loss to Common Stockholders
    
    $
    (31,531
    )
    
    $
    (23,797
    )
    
    $
    (41,235
    )Net Loss Per Common Share  Basic and Diluted
    
    $
    (0.42
    )
    
    $
    (0.37
    )
    
    $
    (1.18
    )Weighted Average Number of Common Shares
Outstanding  Basic and Diluted
    
    
    74,433
    
    
    
    64,400
    
    
    
    35,076
  47




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##### Table of Contents



Endeavour International Corporation
Consolidated Statements of Cash Flows
  Year Ended December 31,2005
    
    2004
    
    2003Cash Flows from Operating Activities:Net loss
    
    $
    (31,373
    )
    
    $
    (23,372
    )
    
    $
    (36,829
    )Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:Depreciation, depletion and amortization
    
    
    9,337
    
    
    
    2,180
    
    
    
    1,497Impairment of oil and gas properties
    
    
    27,116
    
    
    
    
    
    
    
    25,168Consideration given in excess of fair value of
identifiable assets acquired
    
    
    
    
    
    
    10,779
    
    
    
    Deferred tax expense
    
    
    3,243
    
    
    
    199
    
    
    
    Amortization of non-cash compensation
    
    
    7,070
    
    
    
    6,830
    
    
    
    539Litigation settlement expense
    
    
    5,265
    
    
    
    
    
    
    
    Gain on collection of promissory notes
    
    
    
    
    
    
    (1,848
    )
    
    
    Fair market value adjustment of stock options
    
    
    (555
    )
    
    
    1,183
    
    
    
    Gain on sale of assets
    
    
    (14,966
    )
    
    
    (355
    )
    
    
    Bad debt expense  related party
    
    
    
    
    
    
    
    
    
    
    1,800Amortization of discount on note payable
    
    
    
    
    
    
    195
    
    
    
    2,857Equity loss from entities with oil and gas properties
    
    
    79
    
    
    
    201
    
    
    
    1,217Realized loss on marketable securities
    
    
    
    
    
    
    207
    
    
    
    1,659Other
    
    
    1,043
    
    
    
    52
    
    
    
    490Changes in assets and liabilities:(Increase) Decrease in receivables
    
    
    (688
    )
    
    
    1,859
    
    
    
    (129
    )(Increase) Decrease in prepaid expenses and other
    
    
    3,637
    
    
    
    3,847
    
    
    
    (1,271
    )Increase (Decrease) in current liabilities
    
    
    18,754
    
    
    
    4,961
    
    
    
    (177
    )Net Cash Provided by (Used in) Operating Activities
    
    
    27,962
    
    
    
    6,918
    
    
    
    (3,179
    )Cash Flows From Investing Activities:Capital expenditures
    
    
    (47,396
    )
    
    
    (7,064
    )
    
    
    (3,835
    )Investment in entities with oil and gas properties
    
    
    (156
    )
    
    
    (2,081
    )
    
    
    (2,828
    )Acquisitions, net of cash acquired
    
    
    (1,437
    )
    
    
    (26,817
    )
    
    
    Acquisition of entities with oil and gas properties, net
of cash acquired
    
    
    
    
    
    
    
    
    
    
    (2,350
    )Acquisition of notes receivable  related party
    
    
    
    
    
    
    
    
    
    
    (176
    )Repayment of notes receivable  related party
    
    
    
    
    
    
    
    
    
    
    1,316Proceeds from sale of assets
    
    
    19,465
    
    
    
    740
    
    
    
    261Increase in restricted cash
    
    
    (5,448
    )
    
    
    
    
    
    
    Other investing activities
    
    
    
    
    
    
    (11
    )
    
    
    137Net Cash Used in Investing Activities
    
    $
    (34,972
    )
    
    $
    (35,233
    )
    
    $
    (7,475
    )
  48




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##### Table of Contents



Endeavour International Corporation
Consolidated Statements of Cash Flows
  Year Ended December 31,2005
    
    2004
    
    2003Cash Flows From Financing Activities:Repayment of borrowings
    
    $
    (4,006
    )
    
    $
    (6,156
    )
    
    $
    (1,200
    )Repayment of borrowings  related party
    
    
    
    
    
    
    
    
    
    
    (1,399
    )Proceeds from borrowings
    
    
    81,250
    
    
    
    
    
    
    
    1,764Proceeds from borrowings  related party
    
    
    
    
    
    
    
    
    
    
    1,254Proceeds from deferred equity option
    
    
    
    
    
    
    
    
    
    
    870Financing costs paid
    
    
    (3,661
    )
    
    
    
    
    
    
    Receipts of subscription receivable
    
    
    
    
    
    
    
    
    
    
    1,430Receipts of subscription receivable  related party
    
    
    
    
    
    
    
    
    
    
    1,924Purchase and retirement of common stock and Series
B preferred stock
    
    
    
    
    
    
    (5,031
    )
    
    
    Proceeds from warrant and stock option exercises
    
    
    1,956
    
    
    
    1,250
    
    
    
    Proceeds from common and preferred stock issued
and issuable, net of issuance costs
    
    
    
    
    
    
    46,539
    
    
    
    5,738Other financing activities
    
    
    (128
    )
    
    
    (115
    )
    
    
    Net Cash Provided by Financing Activities
    
    
    75,411
    
    
    
    36,487
    
    
    
    10,381Net Increase (Decrease) in Cash and Cash Equivalents
    
    
    68,401
    
    
    
    8,171
    
    
    
    (273
    )Effect of foreign currency changes on cash
    
    
    (1,249
    )
    
    
    747
    
    
    
    Cash and Cash Equivalents, Beginning of Period
    
    
    8,975
    
    
    
    57
    
    
    
    330Cash and Cash Equivalents, End of Period
    
    $
    76,127
    
    
    $
    8,975
    
    
    $
    57
  49




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##### Table of Contents



Endeavour International Corporation
Consolidated Statements of Stockholders Equity
   AccumulatedAdditional
    
    Stock
    
    
    
    
    
    Other
    
    
    
    
    
    Total
    
    TotalPreferred
    
    Preferred
    
    Common
    
    Paid-In
    
    Subscription
    
    Deferred
    
    Comprehensive
    
    Accumulated
    
    Stockholders
    
    ComprehensiveStock - A
    
    Stock - C
    
    Stock
    
    Capital
    
    Receivable
    
    Compensation
    
    Loss
    
    Deficit
    
    Equity
    
    LossBalance, December 31, 2002
    
    $
    4
    
    
    $
    
    
    
    $
    33
    
    
    $
    30,961
    
    
    $
    (3,636
    )
    
    $
    
    
    
    $
    (1,000
    )
    
    $
    (4,887
    )
    
    $
    21,475Payment of subscription
receivable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,781
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,781Payment of subscription
receivable  related
party
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,430
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,430Issuance of common stock
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    8,434
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,438Issuance of warrants
and options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,198
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,198Issuance of Series C
preferred stock
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    7,231
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,232Additional financing
expense on convertible
notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    351
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    351Preferred stock dividend
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,406
    )
    
    
    (4,406
    )Comprehensive Loss:Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (36,829
    )
    
    
    (36,829
    )
    
    $
    (36,829
    )Other
comprehensive
income (net of
tax):Unrealized
gain (loss)
on
available-for-
sale
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    511
    
    
    
    
    
    
    
    511
    
    
    
    511Balance, December 31, 2003
    
    $
    4
    
    
    $
    1
    
    
    $
    37
    
    
    $
    50,175
    
    
    $
    (425
    )
    
    $
    
    
    
    $
    (489
    )
    
    $
    (46,122
    )
    
    $
    3,181
    
    
    $
    (36,318
    )
  50




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##### Table of Contents



Endeavour International Corporation
Consolidated Statements of Stockholders Equity
  AccumulatedAdditional
    
    Stock
    
    
    
    
    
    Other
    
    
    
    
    
    Total
    
    TotalPreferred
    
    Preferred
    
    Common
    
    Paid-In
    
    Subscription
    
    Deferred
    
    Comprehensive
    
    Accumulated
    
    Stockholders
    
    ComprehensiveStock - A
    
    Stock - C
    
    Stock
    
    Capital
    
    Receivable
    
    Compensation
    
    Loss
    
    Deficit
    
    Equity
    
    LossBalance, December 31, 2003
    
    $
    4
    
    
    $
    1
    
    
    $
    37
    
    
    $
    50,175
    
    
    $
    (425
    )
    
    $
    
    
    
    $
    (489
    )
    
    $
    (46,122
    )
    
    $
    3,181Exchange of non-core
assets in the
Restructuring
    
    
    (4
    )
    
    
    
    
    
    
    
    
    
    
    (2,352
    )
    
    
    425
    
    
    
    
    
    
    
    207
    
    
    
    
    
    
    
    (1,724
    )Conversion of preferred
stock in the
Restructuring
    
    
    
    
    
    
    (1
    )
    
    
    3
    
    
    
    211
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    213Conversion of notes in
the Restructuring
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1,958
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,959Issuance of common
stock and warrants in
the Offering, net of
expenses
    
    
    
    
    
    
    
    
    
    
    25
    
    
    
    46,064
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46,089Issuance of common
stock and warrants for
acquisition of NSNV,
net of expenses
    
    
    
    
    
    
    
    
    
    
    13
    
    
    
    25,687
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,700Issuance of common
stock and stock options
as deferred
compensation
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    13,397
    
    
    
    
    
    
    
    (13,400
    )
    
    
    
    
    
    
    
    
    
    
    Other issuances of
common stock
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1,352
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,353Repurchase and
retirement of common
and preferred stock
    
    
    
    
    
    
    
    
    
    
    (14
    )
    
    
    (5,005
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,019
    )Amortization of
deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,830
    
    
    
    
    
    
    
    
    
    
    
    6,830Conversion of warrants
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1,249
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,250Preferred stock dividend
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (425
    )
    
    
    (425
    )Fair market value
adjustment of stock
options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,183
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,183Comprehensive Loss:Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (23,372
    )
    
    
    (23,372
    )
    
    $
    (23,372
    )Other
comprehensive
income (net of
tax):Unrealized gain
(loss) on
available-for-
sale securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (246
    )
    
    
    
    
    
    
    (246
    )
    
    
    (246
    )Balance, December 31, 2004
    
    $
    
    
    
    $
    
    
    
    $
    70
    
    
    $
    133,919
    
    
    $
    
    
    
    $
    (6,570
    )
    
    $
    (528
    )
    
    $
    (69,919
    )
    
    $
    56,972
    
    
    $
    (23,618
    )
  51




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##### Table of Contents



Endeavour International Corporation
Consolidated Statements of Stockholders Equity
  AccumulatedAdditional
    
    Stock
    
    
    
    
    
    Other
    
    
    
    
    
    Total
    
    TotalPreferred
    
    Preferred
    
    Common
    
    Paid-In
    
    Subscription
    
    Deferred
    
    Comprehensive
    
    Accumulated
    
    Stockholders
    
    ComprehensiveStock - A
    
    Stock - C
    
    Stock
    
    Capital
    
    Receivable
    
    Compensation
    
    Loss
    
    Deficit
    
    Equity
    
    LossBalance, December 31, 2004
    
    $
    
    
    
    $
    
    
    
    $
    70
    
    
    $
    133,919
    
    
    $
    
    
    
    $
    (6,570
    )
    
    $
    (528
    )
    
    $
    (69,919
    )
    
    $
    56,972Issuance of common
stock for acquisition
of OER, net of expenses
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    9,256
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,258Issuance of common
stock as deferred
compensation
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    11,102
    
    
    
    
    
    
    
    (9,967
    )
    
    
    
    
    
    
    
    
    
    
    1,137Exercise of warrants
and options
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1,955
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,956Other issuances of
common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    57
    
    
    
    
    
    
    
    267
    
    
    
    
    
    
    
    
    
    
    
    324Amortization of
deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,833
    
    
    
    
    
    
    
    
    
    
    
    6,833Preferred stock dividend
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (158
    )
    
    
    (158
    )Fair market value
adjustment of stock
options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (555
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (555
    )Comprehensive Loss:Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (31,373
    )
    
    
    (31,373
    )
    
    $
    (31,373
    )Other
comprehensive
income (net of
tax):Unrealized loss
on derivative
instruments, net
of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,690
    )
    
    
    
    
    
    
    (3,690
    )
    
    
    (3,690
    )Unrealized gain
(loss) on
available-for-
sale securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (360
    )
    
    
    
    
    
    
    (360
    )
    
    
    (360
    )Balance, December 31, 2005
    
    $
    
    
    
    $
    
    
    
    $
    75
    
    
    $
    155,734
    
    
    $
    
    
    
    $
    (9,437
    )
    
    $
    (4,578
    )
    
    $
    (101,450
    )
    
    $
    40,344
    
    
    $
    (35,423
    )
  52




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
 Note 1  Description of Business
   
    
    a new management team;
    
    a new business strategy of exploration, exploitation and acquisition that is focused on
the North Sea;
    
    the acquisition of NSNV, Inc. which possessed the seismic data and management team that
is central to the Companys new strategy; and
    
    a restructuring which resulted in the sale of all interests in U.S. oil and gas
properties.
 Note 2  Summary of Significant Accounting Policies
 Basis of Presentation and Use of Estimates
   Principles of Consolidation
  53




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
 Change in Method of Accounting for Oil and Gas Operations
   (Amounts in thousands, except per share data)
    
    Year Ended December 31, 2003Net loss to common shareholders under successful efforts
    
    $
    (37,248
    )Adjustments to full cost
    
    
    (3,986
    )Net loss to common shareholders under full cost
    
    $
    (41,234
    )Loss per basic and diluted share under successful efforts
    
    $
    (1.06
    )Loss per basic and diluted share under full cost
    
    $
    (1.18
    )
 Cash and Cash Equivalents
  Inventories
  54




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
 Full Cost Accounting for Oil and Gas Operations
      55




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
  Other Property and Equipment
  Capitalized Interest
  Marketable Securities
  Goodwill and Intangible Assets
   56




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
 Dismantlement, Restoration and Environmental Costs
  Revenue Recognition
  Significant Customers
  Derivative Instruments and Hedging Activities
   57




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
   Concentrations of Credit and Market Risk
    Foreign Currency Translation
  58




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
  Financial Instruments
  Income Taxes
  Stock-Based Compensation Arrangements
    59




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
 (Amounts in thousands, except per share data)
    
    Year Ended December 31,2005
    
    2004
    
    2003Net loss to common stockholders, as reported
    
    $
    (31,531
    )
    
    $
    (23,797
    )
    
    $
    (41,235
    )Add:Stock-based compensation expense as reported
    
    
    4,091
    
    
    
    6,360
    
    
    
    Less:Total stock-based compensation expense
determined under fair-value-based method
for all awards, net of tax
    
    
    (5,676
    )
    
    
    (6,503
    )
    
    
    (826
    )Pro forma net loss
    
    $
    (33,116
    )
    
    $
    (23,940
    )
    
    $
    (42,061
    )Loss per share:Basic and diluted  as reported
    
    $
    (0.42
    )
    
    $
    (0.37
    )
    
    $
    (1.18
    )Basic and diluted  pro forma
    
    $
    (0.44
    )
    
    $
    (0.37
    )
    
    $
    (1.20
    )
  2005
    
    2004
    
    2003Risk free rate
    
    
    3.8
    %
    
    
    4.0
    %
    
    
    1.63  3.84
    %Expected years until exercise
    
    
    5.0
    
    
    
    5.0
    
    
    
    3.0 - 5.0Expected stock volatility
    
    
    71
    %
    
    
    31
    %
    
    
    100
    %Dividend yield
    
    
    
    
    
    
    
    
    
    
    
 Loss Per Share
   60




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
 (Amounts in thousands)
    
    December 31,2005
    
    2004
    
    2003Options and stock-based compensation
    
    
    1,796
    
    
    
    1,093
    
    
    
    1,025Warrants
    
    
    1,275
    
    
    
    1,472
    
    
    
    2,758Convertible Debt
    
    
    14,984
    
    
    
    
    
    
    
    4,320Common shares potentially issuable
    
    
    18,055
    
    
    
    2,565
    
    
    
    8,103
 Impairment of Loans
  Recent Accounting Pronouncements
    61




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
 Note 3  Acquisitions and Dispositions
 Acquisition of NSNV, Inc.
   Acquisition of OER Oil AS
    OER Majority
    
    OER Minority(Amounts in thousands)
    
    Acquisition
    
    AcquisitionCurrent assets
    
    $
    8,099
    
    
    $
    Property and equipment
    
    
    34,032
    
    
    
    (2,654
    )Goodwill
    
    
    20,119
    
    
    
    7,676Other assets
    
    
    2,428
    
    
    
    Current liabilities
    
    
    (1,250
    )
    
    
    16Long-term debt, including current portion of long-term debt
    
    
    (8,480
    )
    
    
    Deferred tax liability
    
    
    (16,646
    )
    
    
    2,070Other long-term liabilities
    
    
    (6,720
    )
    
    
    Minority interest
    
    
    (3,224
    )
    
    
    3,587Consideration given
    
    $
    28,358
    
    
    $
    10,695
 62




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
 The Restructuring
  
    
    Repaid $1.5 million principal amount of our outstanding convertible notes and issued 0.4
million shares of our common stock in exchange for the remaining principal balance due
under the Trident convertible debenture at a contractual conversion price of $1.60 per
share;
    
    Issued approximately one million shares of our common stock in exchange for the $1.55
million principal balance and accrued interest due under the Marcus convertible debenture
at a contractual conversion price of $1.75 per share;
    
    Issued 2.8 million shares of our common stock upon conversion of all of the outstanding
Series C Preferred Stock, and accrued dividends, at a contractual conversion price of $1.70
per share;
    
    Purchased 14.1 million shares of common stock and 103,500 shares of Series B Preferred
Stock for $5.3 million in cash; and
    
    Purchased all outstanding shares of Series A Preferred Stock and a portion of the Series
B Preferred Stock in exchange for certain of our non-core assets, including:
 
    
    100% of our ownership interest in BWP Gas, LLC;
    
    864,560 shares of restricted common stock of BPK Resources, Inc.;
    
    400,000 shares of common stock of Trimedia Group, Inc.;
    
    Notes receivable due from CSR Hackberry, LLC, Snipes, LLC and BPK Resources,
Inc. (BPK) with a combined principal of $0.8 million; and
    
    Subscription receivables due from FEQ Investments, Inc. (FEQ) and GWR Trust
with a combined principal of $0.4 million.
 Sale of PHT Partners, L.P.
  Sale of Louisiana Shelf Partners, L.P.
  Sale of Knox Miss. Partners, L.P.
  63




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
 Sale of CSR-WAHA Partners, LP
  Note 4  Liquidity and Capital Resources
   Restricted Cash
  64




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
 Note 5  Prepaid Expenses and Other Current Assets
  December 31,(Amounts in thousands)
    
    2005
    
    2004Deferred seismic and other costs  PGS
    
    $
    55
    
    
    $
    2,498Crude oil inventory
    
    
    
    
    
    
    255Prepaid insurance
    
    
    933
    
    
    
    252Escrow account for turnkey drilling contract
    
    
    1,341
    
    
    
    Collateral account for derivative instruments
    
    
    4,065
    
    
    
    Other
    
    
    1,676
    
    
    
    809$
    8,070
    
    
    $
    3,814
   Note 6  Equity Interests in Entities with Oil and Gas Properties
  December 31, 2004Excess ofCarrying Value(Amounts in thousands)
    Carrying Value
    Over Net AssetsAPICO, LLC
    
    $
    3,688
    
    
    $
    86
  65




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
 (Amounts in thousands)
    
    December 31, 2004Total Assets
    
    $
    16,780Total Liabilities
    
    $
    29
 Year Ended December 31,(Amounts in thousands)
    
    2004
    
    2003Results of Operations:Revenue
    
    $
    
    
    
    $
    Loss from operations
    
    $
    (956
    )
    
    $
    (4,962
    )Net Loss
    
    $
    (956
    )
    
    $
    (4,888
    )
 APICO, LLC
   Louisiana Shelf Partners, L.P.
   66




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
 Note 7  Property and Equipment
  December 31,(Amounts in thousands)
    
    2005
    
    2004Oil and gas properties under the full cost method:Subject to amortization
    
    $
    50,424
    
    
    $
    20,081Not subject to amortization:Acquired in 2005
    
    
    15,785
    
    
    
    Acquired in 2004
    
    
    24,339
    
    
    
    26,74990,548
    
    
    
    46,830Other oil and gas activities
    
    
    4,875
    
    
    
    4,875Computers, furniture and fixtures
    
    
    1,351
    
    
    
    635Total property and equipment
    
    
    96,774
    
    
    
    52,340Accumulated depreciation, depletion and amortization
    
    
    (37,690
    )
    
    
    (2,112
    )Net property and equipment
    
    $
    59,084
    
    
    $
    50,228
   67




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
 Note 8  Other Assets
  (Amounts in thousands)
    
    2005
    
    2004Intangible assets  workforce in place:Gross
    
    $
    4,800
    
    
    $
    4,800Accumulated amortization
    
    
    (333
    )
    
    
    4,467
    
    
    
    4,800Debt issuance costs
    
    
    3,165
    
    
    
    Long-term portion of PGS commitment (see Note 18)
    
    
    
    
    
    
    2,000Available-for-sale securities
    
    
    960
    
    
    
    1,320Restricted cash
    
    
    2,304
    
    
    
    2,507Other
    
    
    118
    
    
    
    $
    11,014
    
    
    $
    10,627
   (Amounts in thousands)
    
    December 31, 2005
    
    December 31, 2004Gross
    
    
    
    
    
    
    
    
    
    GrossUnrealized
    
    Fair
    
    
    
    
    
    Unrealized
    
    FairCost
    
    Loss
    
    Value
    
    Cost
    
    Loss
    
    ValueTouchstone Shares
    
    $
    1,848
    
    
    $
    (888
    )
    
    $
    960
    
    
    $
    1,848
    
    
    $
    (528
    )
    
    $
    1,320
  68




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##### Table of Contents



Endeavour International Corporation
Notes to Consolidated Financial Statements
   Note 9  Income Taxes
  Year Ended December 31,(Amounts in thousands)
    
    2005
    
    2004
    
    2003Loss before income taxes:Domestic
    
    $
    (2,945
    )
    
    $
    (19,905
    )
    
    $
    (36,829
    )Foreign
    
    
    (17,367
    )
    
    
    (2,797
    )
    
    
    $
    (20,312
    )
    
    $
    (22,702
    )
    
    $
    (36,829
    )Current Taxes:Federal
    
    $
    48
    
    
    $
    
    
    
    $
    State
    
    
    
    
    
    
    
    
    
    
    Foreign
    
    
    7,770
    
    
    
    
    
    
    
    Total current taxes
    
    
    7,818
    
    
    
    
    
    
    
    Deferred Taxes:Federal
    
    
    
    
    
    
    
    
    
    
    State
    
    
    
    
    
    
    
    
    
    
    Foreign
    
    
    3,243
    
    
    
    670
    
    
    
    Total deferred taxes
    
    
    3,243
    
    
    
    670
    
    
    
    Income tax expenses
    
    $
    11,061
    
    
    $
    670
    
    
    $
    
  69




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##### Table of Contents



Endeavor International Corporation
Note to Consolidated Financial Statements
  (Amounts in thousands)
    
    2005
    
    2004Deferred tax asset:Deferred compensation
    
    $
    2,833
    
    
    $
    2,069Asset retirement obligation
    
    
    5,650
    
    
    
    5,294Litigation settlement
    
    
    1,843
    
    
    
    Net operating loss and capital loss carryforward
    
    
    25,145
    
    
    
    14,188Uplift carryforward
    
    
    1,079
    
    
    
    1,057Total deferred tax assets
    
    
    36,550
    
    
    
    22,608Less valuation allowance
    
    
    (27,073
    )
    
    
    (10,129
    )Total deferred tax assets after valuation allowance
    
    
    9,477
    
    
    
    12,479Deferred tax liability:Property, plant and equipment
    
    
    (25,478
    )
    
    
    (29,175
    )Sale/leaseback
    
    
    (950
    )
    
    
    (1,316
    )Other
    
    
    (2,234
    )
    
    
    Total deferred tax liabilities
    
    
    (28,662
    )
    
    
    (30,491
    )Net deferred tax liability
    
    $
    (19,185
    )
    
    $
    (18,012
    )
   (Amounts in thousands)Types of Carryforward
    
    Years of Expiration
    
    Carryforward AmountsNet operating loss  U.S. federal
    
    
    2021  2025
    
    
    $
    22,766Minimum tax credit  U.S. federal
    
    Indefinite
    
    $
    48Net operating loss  U.K.
    
    Indefinite
    
    $
    34,244Uplift  Norway
    
    Indefinite
    
    $
    1,079
   70




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##### Table of Contents



Endeavor International Corporation
Note to Consolidated Financial Statements
    (Amounts in thousands)
    
    Year Ended December 31,2005
    
    2004
    
    2003Federal income tax benefit at statutory rate
    
    $
    (7,109
    )
    
    $
    (7,946
    )
    
    $
    (12,890
    )State income tax benefit (net of effect of
federal benefit)
    
    
    
    
    
    
    
    
    
    
    (2,110
    )Book deductions not deductible for income
tax purposes
    
    
    13
    
    
    
    3,849
    
    
    
    1,273Taxation of foreign operations
    
    
    6,191
    
    
    
    633
    
    
    
    Change in valuation allowance
    
    
    11,966
    
    
    
    4,134
    
    
    
    13,727Income Tax Expense
    
    $
    11,061
    
    
    $
    670
    
    
    $
    Effective Income Tax Rate
    
    
    (54
    )%
    
    
    (3
    )%

    
    
    0
    %
 71




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Endeavor International Corporation
Note to Consolidated Financial Statements
 Note 10  Accrued Expenses
  (Amounts in thousands)
    
    December 31,2005
    
    2004Accrued liabilities for certain stock-based compensation plans
    
    $
    803
    
    
    $
    1,188Accrued capital expenditures and operating expenses
    
    
    
    
    
    
    1,475Accrued compensation
    
    
    1,989
    
    
    
    1,978Accrued interest
    
    
    2,234
    
    
    
    Preferred dividends
    
    
    486
    
    
    
    329Derivative liability
    
    
    4,291
    
    
    
    Foreign taxes payable
    
    
    4,366
    
    
    
    Litigation settlement accrual
    
    
    5,265
    
    
    
    Other
    
    
    1,806
    
    
    
    2,359$
    21,240
    
    
    $
    7,329
 Note 11  Debt and Notes Payable
  December 31,(Amounts in thousands)
    
    2005
    
    20046% Senior notes, due 2012
    
    $
    81,250
    
    
    $
    Handelsbanken
    
    
    
    
    
    
    4,276Capitalized leases
    
    
    
    
    
    
    13081,250
    
    
    
    4,406Less: current portion of capitalized leases
    
    
    
    
    
    
    (118
    )Less: current portion of debt
    
    
    
    
    
    
    (2,138
    )Long-term debt
    
    $
    81,250
    
    
    $
    2,150
 6% Senior notes, due 2012
  72




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##### Table of Contents



Endeavor International Corporation
Note to Consolidated Financial Statements
 Handelsbanken
  Note 12  Other Liabilities
  December 31,(Amounts in thousands)
    
    2005
    
    2004Asset retirement obligations
    
    $
    6,740
    
    
    $
    6,902Long-term commitment to PGS (see Note 18)
    
    
    
    
    
    
    2,000Other
    
    
    13
    
    
    
    77$
    6,753
    
    
    $
    8,979
  December 31,(Amounts in thousands)
    
    2005
    
    2004Carrying amount of asset retirement obligations as of beginning
of year
    
    $
    6,902
    
    
    $
    Liabilities incurred
    
    
    
    
    
    
    6,658Accretion expense
    
    
    542
    
    
    
    57Impact of foreign currency exchange rate changes
    
    
    (704
    )
    
    
    187Carrying amount of asset retirement obligations as of end of year
    
    $
    6,740
    
    
    $
    6,902
 73




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Endeavor International Corporation
Note to Consolidated Financial Statements
 Note 13  Stockholders Equity
  (Amounts in thousands)
    
    Year Ended December 31,2005
    
    2004
    
    2003Common Stock:Outstanding at the beginning of the year
    
    
    69,995
    
    
    
    37,145
    
    
    
    32,718Issuance of common stock in the Offering
    
    
    
    
    
    
    25,000
    
    
    
    Issuance of common stock in the NSNV Acquisition
    
    
    
    
    
    
    12,675
    
    
    
    Issuance of common stock in the OER Acquisition
    
    
    2,184
    
    
    
    
    
    
    
    Other issuances
    
    
    2,548
    
    
    
    4,462
    
    
    
    4,427Repurchases of common stock
    
    
    
    
    
    
    (14,098
    )
    
    
    Conversion of notes payable
    
    
    
    
    
    
    1,402
    
    
    
    Conversion of preferred stock
    
    
    
    
    
    
    2,809
    
    
    
    Exercise of warrants and stock options
    
    
    762
    
    
    
    600
    
    
    
    Outstanding at the end of the year
    
    
    75,489
    
    
    
    69,995
    
    
    
    37,145Series A Preferred Stock:Outstanding at the beginning of the year
    
    
    
    
    
    
    4,091
    
    
    
    4,091Transfer of non-core assets
    
    
    
    
    
    
    (4,091
    )
    
    
    Outstanding at the end of the year
    
    
    
    
    
    
    
    
    
    
    4,091Series B Preferred Stock:Outstanding at the beginning of the year
    
    
    20
    
    
    
    143
    
    
    
    143Repurchases of preferred stock
    
    
    
    
    
    
    (103
    )Transfer of non-core assets
    
    
    
    
    
    
    (20
    )
    
    
    Outstanding at the end of the year
    
    
    20
    
    
    
    20
    
    
    
    143Series C Preferred Stock:Outstanding at the beginning of the year
    
    
    
    
    
    
    478
    
    
    
    Issuances of preferred stock
    
    
    
    
    
    
    
    
    
    
    478Conversion to common stock
    
    
    
    
    
    
    (478
    )
    
    
    Outstanding at the end of the year
    
    
    
    
    
    
    
    
    
    
    478
 Common Stock
   74




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Endeavor International Corporation
Note to Consolidated Financial Statements
          75




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##### Table of Contents



Endeavor International Corporation
Note to Consolidated Financial Statements
   Series A Preferred Stock
  Series B Preferred Stock
    Series C Convertible Preferred Stock
   76




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##### Table of Contents



Endeavor International Corporation
Note to Consolidated Financial Statements
  Stock Warrants
  (Amounts inthousands, exceptper share data)
    
    December 31, 2005
    
    December 31, 2004Expiration Date
    
    Exercise Price
    
    Shares
    
    Exercise Price
    
    SharesFebruary 2005
    
    
    
    
    
    
    
    
    
    $
    2.25
    
    
    
    200October 2005
    
    
    
    
    
    
    
    
    
    $
    2.00
    
    
    
    233May 2006
    
    $
    2.00
    
    
    
    1,538
    
    
    $
    2.00
    
    
    
    1,550October 2006
    
    $
    2.00
    
    
    
    50
    
    
    $
    2.00
    
    
    
    50February 2009
    
    $
    2.00
    
    
    
    700
    
    
    $
    2.00
    
    
    
    700April 2012
    
    $
    2.00
    
    
    
    90
    
    
    $
    2.00
    
    
    
    1252,378
    
    
    
    
    
    
    
    2,858
   Stock Options
  (Amounts inthousands, exceptper share data)
    
    Options Outstanding
    
    Options ExercisableWeighted Average
    
    Weighted Average
    
    
    
    
    
    Weighted AverageRange of Exercise
    
    Number of Options
    
    Remaining
    
    Exercise Price Per
    
    Number
    
    Exercise Price PerPrices
    
    Outstanding
    
    Contractual Life
    
    Share
    
    Exercisable
    
    Share$2.00 - $2.99
    
    
    2,278
    
    
    
    2.9
    
    
    $
    2.07
    
    
    
    1,683
    
    
    $
    2.09$3.00 - $3.99
    
    
    496
    
    
    
    3.0
    
    
    
    3.29
    
    
    
    305
    
    
    
    3.04Greater than $4.00
    
    
    1,513
    
    
    
    4.2
    
    
    
    4.45
    
    
    
    
    
    
    
    4,287
    
    
    
    3.4
    
    
    $
    3.05
    
    
    
    1,988
    
    
    $
    2.23
 77




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##### Table of Contents



Endeavor International Corporation
Note to Consolidated Financial Statements
  (Amounts inthousands, exceptper share data)
    
    2005
    
    2004
    
    2003Weighted Average
    
    
    
    
    
    Weighted Average
    
    
    
    
    
    Weighted AverageExercise Price per
    
    
    
    
    
    Exercise Price per
    
    
    
    
    
    Exercise Price perNumber of Shares
    
    Share
    
    Number of Shares
    
    Share
    
    Number of Shares
    
    ShareBalance outstanding
 beginning of year
    
    
    2,878
    
    
    $
    2.24
    
    
    
    1,025
    
    
    $
    2.76
    
    
    
    500
    
    
    $
    5.00Granted
    
    
    1,699
    
    
    $
    4.37
    
    
    
    1,903
    
    
    $
    2.03
    
    
    
    525
    
    
    $
    3.19Exercised
    
    
    (230
    )
    
    $
    2.88
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    (60
    )
    
    $
    2.37
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Expired
    
    
    
    
    
    
    
    
    
    
    (50
    )
    
    $
    5.00
    
    
    
    
    
    
    
    Balance outstanding
 end of year
    
    
    4,287
    
    
    $
    3.05
    
    
    
    2,878
    
    
    $
    2.24
    
    
    
    1,025
    
    
    $
    2.76
   Note 14  Related Party Transactions
    78




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Endeavor International Corporation
Note to Consolidated Financial Statements
    Note 15  Supplementary Cash Flow Disclosures
  (Amounts in thousands)
    
    Year Ended December 31,2005
    
    2004
    
    2003Interest paid
    
    $
    2,340
    
    
    $
    130
    
    
    $
    210Income taxes paid
    
    $
    3,206
    
    
    $
    
    
    
    $
    
 Non-Cash Investing and Financing Transactions
       79




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##### Table of Contents



Endeavor International Corporation
Note to Consolidated Financial Statements
    Note 16  Leases
 Operating Leases
  Note 17  Comprehensive Loss
  80




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##### Table of Contents



Endeavor International Corporation
Note to Consolidated Financial Statements
 (Amounts in thousands)
    
    Year Ended December 31,2005
    
    2004
    
    2003Net loss
    
    $
    (31,373
    )
    
    $
    (23,372
    )
    
    $
    (36,829
    )Related to derivative instruments:Unrealized loss
    
    
    (5,672
    )
    
    
    
    
    
    
    Reclassification adjustment
for loss realized in net loss
above
    
    
    1,982
    
    
    
    
    
    
    
    Related to marketable securities:Unrealized loss
    
    
    (360
    )
    
    
    (528
    )
    
    
    (465
    )Reclassification adjustment
for loss realized in net loss
above
    
    
    
    
    
    
    282
    
    
    
    976Unrealized gain (loss), net
    
    
    (4,050
    )
    
    
    (246
    )
    
    
    511Comprehensive loss
    
    $
    (35,423
    )
    
    $
    (23,618
    )
    
    $
    (36,318
    )
  (Amounts in thousands)
    
    December 31,2005
    
    2004
    
    2003Related to derivative instruments:Balance at beginning of year
    
    $
    
    
    
    $
    
    
    
    $
    Change during the year
    
    
    (3,690
    )
    
    
    
    
    
    
    Balance at end of year
    
    
    (3,690
    )
    
    
    
    
    
    
    Related to marketable securities:Balance at beginning of year
    
    
    (528
    )
    
    
    (489
    )
    
    
    (1,000
    )Change during the year
    
    
    (360
    )
    
    
    (39
    )
    
    
    511Balance at end of year
    
    
    (888
    )
    
    
    (528
    )
    
    
    (489
    )Accumulated comprehensive loss
    
    $
    (4,578
    )
    
    $
    (528
    )
    
    $
    (489
    )
 Note 18  Commitments and Contingencies
 General
  81




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##### Table of Contents



Endeavor International Corporation
Note to Consolidated Financial Statements
  PGS Commitment
  Rig Commitments
  Legal Proceeding
  Note 19  Derivative Financial Instruments
  82




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##### Table of Contents



Endeavor International Corporation
Note to Consolidated Financial Statements
   Note 20  Segment and Geographic Information
  (Amounts in thousands)
    
    2005
    
    2004
    
    2003Revenue
    
    Long-lived Assets
    
    Revenue
    
    Long-lived Assets
    
    Revenue
    
    Long-lived AssetsUnited States
    
    $
    
    
    
    $
    11,298
    
    
    $
    8
    
    
    $
    32,846
    
    
    $
    27
    
    
    $
    7,569United Kingdom
    
    
    
    
    
    
    16,381
    
    
    
    
    
    
    
    8,918
    
    
    
    
    
    
    
    Norway
    
    
    38,656
    
    
    
    68,620
    
    
    
    3,655
    
    
    
    39,210
    
    
    
    
    
    
    
    The Netherlands
    
    
    
    
    
    
    1,594Thailand
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,688
    
    
    
    
    
    
    
    1,693$
    38,656
    
    
    $
    97,893
    
    
    $
    3,663
    
    
    $
    84,662
    
    
    $
    27
    
    
    $
    9,262
 83




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##### Table of Contents



Endeavor International Corporation
Note to Consolidated Financial Statements
 Note 21  Quarterly Financial Data
 (Amounts in thousands, except per share data)First Quarter
    
    Second Quarter
    
    Third Quarter
    
    Fourth Quarter2005Revenues
    
    $
    7,703
    
    
    $
    9,091
    
    
    $
    10,852
    
    
    $
    11,010Operating expenses
    
    
    8,865
    
    
    
    9,574
    
    
    
    20,092
    
    
    
    28,214Loss from operations
    
    
    (1,162
    )
    
    
    (483
    )
    
    
    (9,240
    )
    
    
    (17,204
    )Net income (loss) to common stockholders
    
    
    (2,692
    )
    
    
    11,218
    
    
    
    (14,461
    )
    
    
    (25,596
    )Net income (loss) per common share  basic
    
    
    (0.04
    )
    
    
    0.15
    
    
    
    (0.19
    )
    
    
    (0.34
    )Net income (loss) per common share  diluted
    
    
    (0.04
    )
    
    
    0.13
    
    
    
    (0.19
    )
    
    
    (0.34
    )2004Revenues
    
    $
    8
    
    
    $
    
    
    
    $
    
    
    
    $
    3,655Operating expenses
    
    
    2,723
    
    
    
    3,403
    
    
    
    4,130
    
    
    
    8,899Loss from operations
    
    
    (2,715
    )
    
    
    (3,403
    )
    
    
    (4,130
    )
    
    
    (5,245
    )Net loss to common stockholders
    
    
    (12,924
    )
    
    
    (2,326
    )
    
    
    (4,026
    )
    
    
    (4,520
    )Net loss per common share  basic and diluted
    
    
    (0.26
    )
    
    
    (0.03
    )
    
    
    (0.06
    )
    
    
    (0.06
    )
 Note 22  Supplemental Oil and Gas Disclosures  Unaudited
 Capitalized Costs Relating to Oil and Gas Producing Activities(Amounts in thousands)
    
    United Kingdom
    
    Norway
    
    United States
    
    Thailand
    
    The Netherlands
    
    TotalDecember 31, 2005:Proved
    
    $
    
    
    
    $
    23,308
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    23,308Unproved
    
    
    43,101
    
    
    
    22,545
    
    
    
    
    
    
    
    
    
    
    
    1,594
    
    
    
    67,240Total capitalized costs
    
    
    43,101
    
    
    
    45,853
    
    
    
    
    
    
    
    
    
    
    
    1,594
    
    
    
    90,548Accumulated
depreciation,
depletion and
amortization
    
    
    (27,116
    )
    
    
    (7,662
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (34,778
    )Net capitalized costs
    
    $
    15,985
    
    
    $
    38,191
    
    
    $
    
    
    
    $
    
    
    
    $
    1,594
    
    
    $
    55,770
 84




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##### Table of Contents



Endeavor International Corporation
Note to Consolidated Financial Statements
 Capitalized Costs Relating to Oil and Gas Producing Activities(Amounts in thousands)
    
    United Kingdom
    
    Norway
    
    United States
    
    Thailand
    
    The Netherlands
    
    TotalDecember 31, 2004:Proved
    
    $
    
    
    
    $
    20,081
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    20,081Unproved
    
    
    8,769
    
    
    
    17,523
    
    
    
    
    
    
    
    309
    
    
    
    148
    
    
    
    26,749Total capitalized costs
    
    
    8,769
    
    
    
    37,604
    
    
    
    
    
    
    
    309
    
    
    
    148
    
    
    
    46,830Accumulated
depreciation,
depletion and
amortization
    
    
    
    
    
    
    (901
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (901
    )Net capitalized costs
    
    $
    8,769
    
    
    $
    36,703
    
    
    $
    
    
    
    $
    309
    
    
    $
    148
    
    
    $
    45,929Equity Method Investees for the year ended December 31,:2004
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    3,532
    
    
    $
    
    
    
    $
    3,532
 Costs Incurred in Oil and Gas Property Acquisition, Exploration and Development Activities(Amounts in thousands)
    
    United Kingdom
    
    Norway
    
    United States
    
    Thailand
    
    The Netherlands
    
    TotalYear Ended December 31, 2005:Acquisition costs:Proved
    
    $
    
    
    
    $
    (2,151
    )
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    (2,151
    )Unproved
    
    
    
    
    
    
    (503
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (503
    )Exploration costs
    
    
    34,332
    
    
    
    7,626
    
    
    
    
    
    
    
    
    
    
    
    1,446
    
    
    
    43,404Development costs
    
    
    
    
    
    
    3,277
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,277Total costs incurred
    
    $
    34,332
    
    
    $
    8,249
    
    
    $
    
    
    
    $
    
    
    
    $
    1,446
    
    
    $
    44,027Year Ended December 31, 2004:Acquisition costs:Proved
    
    $
    
    
    
    $
    19,210
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    19,210Unproved
    
    
    4,534
    
    
    
    14,822
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,356Exploration costs
    
    
    4,235
    
    
    
    2,700
    
    
    
    
    
    
    
    309
    
    
    
    148
    
    
    
    7,392Development costs
    
    
    
    
    
    
    872
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    872Total costs incurred
    
    $
    8,769
    
    
    $
    37,604
    
    
    $
    
    
    
    $
    309
    
    
    $
    148
    
    
    $
    46,830
 85




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##### Table of Contents



Endeavor International Corporation
Note to Consolidated Financial Statements
 Costs Incurred in Oil and Gas Property Acquisition, Exploration and Development Activities(Amounts in thousands)
    
    United Kingdom
    
    Norway
    
    United States
    
    Thailand
    
    The Netherlands
    
    TotalYear Ended December 31, 2003:Acquisition costs:Proved
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Unproved
    
    
    
    
    
    
    
    
    
    
    11,962
    
    
    
    
    
    
    
    
    
    
    
    11,962Exploration costs
    
    
    
    
    
    
    
    
    
    
    2,118
    
    
    
    
    
    
    
    
    
    
    
    2,118Development costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total costs incurred
    
    $
    
    
    
    $
    
    
    
    $
    14,080
    
    
    $
    
    
    
    $
    
    
    
    $
    14,080Equity Method Investees for
the year ended December 31,:2005
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $2004
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    2,127
    
    
    $
    
    
    
    $
    2,1272003
    
    $
    
    
    
    $
    
    
    
    $
    8,758
    
    
    $
    643
    
    
    $
    
    
    
    $
    9,401
  86




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Endeavour International Corporation
Notes to Consolidated Financial Statements
 Results of Operations for Oil and Gas Producing ActivitiesUnited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    The(Amounts in thousands)
    
    Kingdom
    
    
    Norway
    
    
    United States
    
    
    Thailand
    
    
    Netherlands
    
    
    TotalYear Ended December 31, 2005:Revenues
    
    $
    
    
    
    $
    38,656
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    38,656Production expenses
    
    
    
    
    
    
    11,990
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,990DD&A
    
    
    
    
    
    
    7,377
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,377Impairment of oil
and gas properties
    
    
    27,116
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,116Income tax expense
    
    
    
    
    
    
    15,046
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,046Results of activities
    
    $
    (27,116
    )
    
    $
    4,243
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    (22,873
    )Year Ended December 31, 2004:Revenues
    
    $
    
    
    
    $
    3,655
    
    
    $
    8
    
    
    $
    
    
    
    $
    
    
    
    $
    3,663Production expenses
    
    
    
    
    
    
    2,064
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    2,065DD&A
    
    
    
    
    
    
    901
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    903Income tax expense
    
    
    
    
    
    
    538
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    538Results of activities
    
    $
    
    
    
    $
    152
    
    
    $
    5
    
    
    $
    
    
    
    $
    
    
    
    $
    157Year Ended December 31, 2003:Revenues
    
    $
    
    
    
    $
    
    
    
    $
    27
    
    
    $
    
    
    
    $
    
    
    
    $
    27Production expenses
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    6DD&A
    
    
    
    
    
    
    
    
    
    
    1,497
    
    
    
    
    
    
    
    
    
    
    
    1,497Impairment of oil
and gas properties
    
    
    
    
    
    
    
    
    
    
    25,168
    
    
    
    
    
    
    
    
    
    
    
    25,168Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Results of activities
    
    $
    
    
    
    $
    
    
    
    $
    (26,644
    )
    
    $
    
    
    
    $
    
    
    
    $
    (26,644
    )Equity Method Investees for
the year ended December 31,:2005
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    2004
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    (201
    )
    
    $
    
    
    
    $
    (201
    )2003
    
    $
    
    
    
    $
    
    
    
    $
    (1,123
    )
    
    $
    (85
    )
    
    $
    
    
    
    $
    (1,208
    )
 Oil and Gas Reserves
  87




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Endeavour International Corporation
Notes to Consolidated Financial Statements
 Year Ended December 31,2005
    
    
    2004
    
    
    2004
    
    
    2004
    
    
    2003United
    
    
    
    
    
    
    
    
    
    
    UnitedNorway
    
    
    States
    
    
    Norway
    
    
    Total
    
    
    StatesProved Oil Reserves (MBbls):Proved reserves, beginning of year
    
    
    1,543
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Purchase of proved reserves, in place
    
    
    
    
    
    
    
    
    
    
    1,634
    
    
    
    1,634
    
    
    
    Production
    
    
    (726
    )
    
    
    
    
    
    
    (91
    )
    
    
    (91
    )
    
    
    Sales of reserves, in place
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Extensions and discoveries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Revisions of previous estimates
    
    
    347
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Proved reserves, end of year
    
    
    1,164
    
    
    
    
    
    
    
    1,543
    
    
    
    1,543
    
    
    
    Proved Gas Reserves (MMcf):Proved reserves, beginning of year
    
    
    6,725
    
    
    
    52
    
    
    
    
    
    
    
    52
    
    
    
    Purchase of proved reserves, in place
    
    
    
    
    
    
    
    
    
    
    6,740
    
    
    
    6,740
    
    
    
    60Production
    
    
    (184
    )
    
    
    (2
    )
    
    
    (15
    )
    
    
    (17
    )
    
    
    (8
    )Sales of reserves, in place
    
    
    
    
    
    
    (50
    )
    
    
    
    
    
    
    (50
    )
    
    
    Extensions and discoveries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Revisions of previous estimates
    
    
    (244
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Proved reserves, end of year
    
    
    6,297
    
    
    
    
    
    
    
    6,725
    
    
    
    6,725
    
    
    
    52Proved Reserves (MBOE):Proved reserves, beginning of year
    
    
    2,664
    
    
    
    9
    
    
    
    
    
    
    
    9
    
    
    
    Purchase of proved reserves, in place
    
    
    
    
    
    
    
    
    
    
    2,757
    
    
    
    2,757
    
    
    
    10Production
    
    
    (756
    )
    
    
    (1
    )
    
    
    (93
    )
    
    
    (94
    )
    
    
    (1
    )Sales of reserves, in place
    
    
    
    
    
    
    (8
    )
    
    
    
    
    
    
    (8
    )
    
    
    Extensions and discoveries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Revisions of previous estimates
    
    
    306
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Proved reserves, end of year
    
    
    2,214
    
    
    
    
    
    
    
    2,664
    
    
    
    2,664
    
    
    
    9Proved Developed Oil Reserves (MBbls)
    
    
    816
    
    
    
    
    
    
    
    1,094
    
    
    
    1,094
    
    
    
    Proved Developed Gas Reserves (MMcf)
    
    
    33
    
    
    
    
    
    
    
    123
    
    
    
    123
    
    
    
    52Proved Developed Reserves (MBOE)
    
    
    822
    
    
    
    
    
    
    
    1,115
    
    
    
    1,115
    
    
    
    9
  88




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Endeavour International Corporation
Notes to Consolidated Financial Statements
 Year Ended December 31,2005
    
    
    2004
    
    
    2003Equity in proved reserves of equity method investees:Gas (MMcf)
    
    
    
    
    
    
    25,006
    
    
    
    Natural gas liquids (MBbls)
    
    
    
    
    
    
    75
    
    
    
    Proved Reserves (MBOE)
    
    
    
    
    
    
    4,243
    
    
    
    
  Standardized Measure of Discounted Future Net Cash Flows
     89




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Endeavour International Corporation
Notes to Consolidated Financial Statements
 Standardized Measure of Discounted Future Net Cash Flows(Amounts in thousands)
    
    December 31,2005
    
    
    2004Norway
    
    
    Norway
    
    
    Thailand
    
    
    TotalFuture cash inflows
    
    $
    137,637
    
    
    $
    89,073
    
    
    $
    
    
    
    $
    89,073Future production costs
    
    
    (49,514
    )
    
    
    (42,715
    )
    
    
    
    
    
    
    (42,715
    )Future development costs
    
    
    (17,922
    )
    
    
    (21,192
    )
    
    
    
    
    
    
    (21,192
    )Future income tax expense
    
    
    (48,762
    )
    
    
    (12,086
    )
    
    
    
    
    
    
    (12,086
    )Future net cash flows (undiscounted)
    
    
    21,439
    
    
    
    13,080
    
    
    
    
    
    
    
    13,080Annual discount of 10% for estimated timing
    
    
    2,914
    
    
    
    2,815
    
    
    
    
    
    
    
    2,815Standardized measure of future net cash flows
    
    $
    18,525
    
    
    $
    10,265
    
    
    $
    
    
    
    $
    10,265Equity Method Investees
    
    $
    
    
    
    $
    
    
    
    $
    15,251
    
    
    $
    15,251
 Principal Sources of Change in the Standardized Measure of Discounted Future Net Cash Flows(Amounts in thousands)
    
    Year Ended December 31,2005
    
    
    2004
    
    
    2003Standardized measure, beginning of period
    
    $
    10,265
    
    
    $
    71
    
    
    $
    Net changes in prices and production costs
    
    
    44,166
    
    
    
    1,581
    
    
    
    Future development costs
    
    
    3,277
    
    
    
    871
    
    
    
    Revisions of previous quantity estimates
    
    
    9,502
    
    
    
    
    
    
    
    Extension of reservoir
    
    
    
    
    
    
    
    
    
    
    Sale of reserves in place
    
    
    
    
    
    
    (71
    )
    
    
    Accretion of discount
    
    
    1,963
    
    
    
    
    
    
    
    Changes in income taxes, net
    
    
    (26,876
    )
    
    
    1,063
    
    
    
    Sale of oil and gas produced, net of production costs
    
    
    (26,667
    )
    
    
    (1,591
    )
    
    
    Purchased reserves
    
    
    
    
    
    
    10,498
    
    
    
    71Change in estimated future development costs,
production, timing and other
    
    
    2,895
    
    
    
    (2,157
    )
    
    
    Standardized measure, end of period
    
    $
    18,525
    
    
    $
    10,265
    
    
    $
    71Equity Method Investees
    
    $
    
    
    
    $
    15,251
    
    
    $
    
 90




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##### Table of Contents



Endeavour International Corporation
 
 Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure.
  
 Item 9A. Controls and Procedures.
 Evaluation of Disclosure Controls and Procedures
  Managements Assessment on Internal Control Over Financial Reporting
     Changes in Internal Control over Financial Reporting
  91




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Endeavour International Corporation
 Report of Independent Registered Public Accounting Firm
 
 .
     92




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Endeavour International Corporation
   
 93




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##### Table of Contents



Endeavour International Corporation
 
 Item 9B. Other Information
  
 Part III
 
 Item 10. Directors and Executive Officers of the Registrant
  
 Item 11. Executive Compensation
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
  
 Item 13. Certain Relationships and Related Transactions
  94




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##### Table of Contents



Endeavour International Corporation
 
 Item 14. Principal Accounting Fees and Services
  
 Part IV
 
 Item 15. Exhibits and Financial Statement Schedules
 
     95




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Endeavour International Corporation
 
 SIGNATURES
  Endeavour International Corporation
 By:
    
    /s/ William L. Transier
    
    /s/ John N. SeitzWilliam L. Transier
    
    John N. SeitzCo-Chief Executive Officer
    
    Co-Chief Executive Officer
   Signature
    
    Title
    
    DateBy:
    
    /s/ William L. Transier
    
    Co-Chief Executive
Officer and Director (Co-Principal Executive
Officer)
    
    March 10, 2006William L. TransierBy:
    
    /s/ John N. Seitz
    
    Co-Chief Executive
Officer and Director (Co-Principal Executive
Officer)
    
    March 10, 2006John N. SeitzBy:
    
    /s/ John B. Connally III
    
    Director
    
    March 10, 2006John B. Connally IIIBy:
    
    /s/ Barry J. Galt
    
    Director
    
    March 10, 2006Barry J. GaltBy:
    
    /s/ Nancy K. Quinn
    
    Director
    
    March 10, 2006Nancy K. QuinnBy:
    
    /s/ Lance Gilliland
    
    Chief Financial Officer
(Principal Financial Officer)
    
    March 10, 2006Lance GillilandBy:
    
    /s/ Robert L. Thompson
    
    Chief Accounting Officer (Principal
Accounting Officer)
    
    March 10, 2006Robert L. Thompson
 96




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##### Table of Contents



Index to Exhibits
 Exhibit
    
    Description2.1
    
    Agreement and Plan of Merger by and among Continental Southern Resources,
Inc., CSOR Acquisition Corp. and NSNV, Inc. (Incorporated by reference to
Exhibit 2.1 on Current Report on Form 8-K (Commission File No. 000-33439)
filed February 27, 2004)2.2
    
    Plan and Agreement of Merger, dated as of February 27, 2004, between
Continental Southern Resources, Inc. (n/k/a Endeavour International
Corporation) and its wholly-owned subsidiary Endeavour International
Corporation (Incorporated by reference to Exhibit 10.1 on Current Report
on Form 8-K (Commission File No. 000-33439) filed on March 1, 2004)3.1
    
    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)3.2
    
    Amended and Restated Bylaws (Incorporated by reference to Exhibit 3.1 of
our Quarterly Report on Form 10-Q (Commission File No. 001-32212) for the
quarter ended June 30, 2004)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
    
    Articles of Merger filed February 27, 2004 (Incorporated by reference to
Exhibit 3.4 of our Quarterly Report on Form 10-Q (Commission File No.
001-32212) for the quarter ended June 30, 2004.)3.5
    
    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.)4.1 (a)
    
    Warrants to Purchase Common Stock issued to Gemini Growth Fund, L.P. in
April 2002 (Incorporated by reference to Exhibit 4.6 of our Quarterly
Report on Form 10-QSB (Commission File No. 000-33439) for the Quarter
Ended June 30, 2002.)4.1 (b)
    
    First Amendment to Warrants to Purchase Common Stock dated July 29, 2003
(warrant # 2002-1) (Incorporated by reference to Exhibit 4.5 of our Annual
Report on Form 10-KSB (Commission File No. 000-33439) for the year ended
December 31, 2003.)4.1 (c)
    
    Second Amendment to Warrants to Purchase Common Stock dated February 26,
2004 (warrant # 2002-1) (Incorporated by reference to Exhibit 4.5 of our
Annual Report on Form 10-KSB (Commission File No. 000-33439) for the year
ended December 31, 2003.)4.2 (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)




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##### Table of Contents



Exhibit
    
    Description4.2 (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)4.3 (a)
    
    Warrants to Purchase Common Stock issued to Trident Growth Fund, LP
(warrant # 2003-1) (Incorporated by reference to Exhibit 4.8 of our Annual
Report on Form 10-KSB (Commission File No. 000-33439) for the year ended
December 31, 2003)4.3 (b)
    
    First Amendment to Warrants to Purchase Common Stock dated July 29, 2003
(warrant #2003-1) (Incorporated by reference to Exhibit 4.8 of our Annual
Report on Form 10-KSB (Commission File No. 000-33439) for the year ended
December 31, 2003)4.3 (c)
    
    Second Amendment to Warrants to Purchase Common Stock dated February 26,
2004 (warrant # 2003-1) (Incorporated by reference to Exhibit 4.8 of our
Annual Report on Form 10-KSB (Commission File No. 000-33439) for the year
ended December 31, 2003)4.4
    
    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).4.5
    
    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.)4.6
    
    Registration Rights Agreement dated as of January 20, 2005, among
Endeavour International Corporation and J.P. Morgan Securities Inc. and
Sanders Morris Harris Inc., as Placement Agents (Incorporated by reference
to our Exhibit 4.2 to our Current Report on Form 8-K (Commission File No.
001-32212) filed on January 24, 2005.)4.7 (a)
    
    Debt agreement between OER oil AS and Handelsbanken (Incorporated by
reference to Exhibit 10.1 to our Current Report on Form 8-K (Commission
File No. 001-32212) filed on November 30, 2004.)4.7 (b)
    
    Amendment to debt agreement between OER oil AS and Handelsbanken
(Incorporated by reference to Exhibit 10.2 to our Current Report on Form
8-K (Commission File No. 001-32212) filed on November 30, 2004.)10.1
    
    Form of Amended and Restated Option to Purchase 100,000 Shares of Common
Stock dated August 8, 2003, between the Company and each of Stephen P.
Harrington, Humbert B. Powell, III, Gary Krupp, Thomas M. Curran and John
B. Connally III (Incorporated by reference to Exhibit 10.25 of our
Quarterly Report on Form 10-QSB (Commission File No. 000-33439) for the
quarter ended June 30, 2003).10.2 (a)
    
    Option to Purchase 200,000 shares of Common Stock issued to Joseph M.
Fioravanti (Incorporated by reference to Exhibit 10.26 of our Quarterly
Report on Form 10-QSB (Commission File No. 000-33439) for the quarter
ended June 30, 2003.)




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##### Table of Contents



Exhibit
    
    Description10.2 (b)
    
    Amendment to Option to Purchase Common Stock dated February 26, 2004
between the Company and Joseph M. Fiorvanti (Incorporated by reference to
Exhibit 10.7 of our Annual Report on Form 10-KSB (Commission File No.
000-33439) for the year ended December 31, 2003.)10.3
    
    Form of Amendment to Amended and Restated Option to Purchase Common Stock
dated February 26, 2004, executed by each of Stephen P. Harrington,
Humbert B. Powell, III Gary Krupp, Thomas M. Curran and John B. Connally.
(Incorporated by reference to Exhibit 10.8 of our Annual Report on Form
10-KSB (Commission File No. 000-33439) for the year ended December 31,
2003)10.4
    
    Form of Common Stock Purchase Warrant dated October 18, 2002 issued to
Michael Marcus and Amendment to Common Stock Purchase Warrant issued to
Michael Marcus. (Incorporated by reference to Exhibit 10.20 of our Annual
Report on Form 10-KSB (Commission File No. 000-33439) for the year ended
December 31, 2003)10.5
    
    Purchase and Sale Agreement by and between Continental Southern Resources,
Inc. and CSOR Preferred Liquidation, LLC, dated February 26, 2004.
(Incorporated by reference to Exhibit 10.21 of our Annual Report on Form
10-KSB (Commission File No. 000-33439) for the year ended December 31,
2003)10.6 (a)
    
    Stock Acquisition Agreement dated as of December 16, 2003 between
Continental Southern Resources, Inc. and Ram Trading, Ltd. (Incorporated
by reference to Exhibit 99.6 of the Schedule 13D (Commission File No.
005-62401) filed on March 9, 2004 by Ram Trading, Ltd. et al)10.6 (b)
    
    Amendment to Stock Acquisition Agreement dated as of December 30, 2003 by
and between Ram Trading, Ltd. and Continental Southern Resources, Inc.
(Incorporated by reference to Exhibit 99.7 of the Schedule 13D (Commission
File No. 005-62401) filed on March 9, 2004 by Ram Trading, Ltd. et al)10.7
    
    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 the Company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)10.8
    
    Form of Securities Purchase Agreement, dated February 4, 2004, by and
between Continental Southern Resources, Inc. and certain purchasers
pursuant to a private placement of 125,000 shares of Companys common
stock. (Incorporated by reference to Exhibit 10.25 of our Annual Report on
Form 10-KSB (Commission File No. 000-33439) for the year ended December
31, 2003)10.9
    
    Registration Rights Agreement dated as of February 26, 2004 pursuant to
the private placement of 25,000,000 shares of the Companys common stock.
(Incorporated by reference to Exhibit 10.26 of our Annual Report on Form
10-KSB (Commission File No. 000-33439) for the year ended December 31,
2003)10.10
    
    Piggyback Registration Rights Agreement dated as of February 26, 2004
between the Company and certain purchasers. (Incorporated by reference to
Exhibit 99.2 of the Schedule 13D (Commission File No. 005-62401) filed on
March 9, 2004 by Ram Trading, Ltd. et al).




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##### Table of Contents



Exhibit
    
    Description10.11
    
    Interest Purchase Agreement dated February 26, 2004 by and between
Continental Southern Resources, Inc. and Knox Gas, LLC. (Incorporated by
reference to Exhibit 10.28 of our Annual Report on Form 10-KSB (Commission
File No. 000-33439) for the year ended December 31, 2003)10.12
    
    Interest Pledge Agreement, dated February 26, 2004, by and among Knox Gas,
LLC and Continental Southern Resources, Inc. (Incorporated by reference to
Exhibit 10.29 of our Annual Report on Form 10-KSB (Commission File No.
000-33439) for the year ended December 31, 2003)10.13
    
    Secured Promissory Note dated February 26, 2004, made by Knox Gas, LLC in
favor of Continental Southern Resources, Inc. (Incorporated by reference
to Exhibit 10.30 of our Annual Report on Form 10-KSB (Commission File No.
000-33439) for the year ended December 31, 2003)10.14
    
    Form of Lock Up Agreement executed by each of the current executive
officers of the Company and PGS Exploration (UK) Limited. (Incorporated by
reference to Exhibit 10.34 of our Annual Report on Form 10-KSB (Commission
File No. 000-33439) for the year ended December 31, 2003)10.15
    
    Form of Lock-up Agreement executed by certain of the Companys
stockholders. (Incorporated by reference to Exhibit 10.35 of our Annual
Report on Form 10-KSB (Commission File No. 000-33439) for the year ended
December 31, 2003)10.16
    
    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)10.17
    
    Employment Agreement dated February 26, 2004 by and between Continental
Southern Resources, Inc. and William L. Transier. (Incorporated by
reference to Exhibit 10.37 of our Annual Report on Form 10-KSB (Commission
File No. 000-33439) for the year ended December 31, 2003)10.18
    
    Employment Agreement dated February 26, 2004 by and between Continental
Southern Resources, Inc. and John N. Seitz. (Incorporated by reference to
Exhibit 10.38 of our Annual Report on Form 10-KSB (Commission File No.
000-33439) for the year ended December 31, 2003)10.19
    
    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)10.20 (a)
    
    Agreement between PGS Exploration (UK) Limited and NSNV, Inc. as Licensee.
(Portions of this exhibit have been omitted pursuant to a request for
confidential treatment.) (Incorporated by reference to Exhibit 10.1 for
our Quarterly Report on Form 10-Q (Commission File No. 000-33439) for the
quarter ended March 31, 2004.)10.20 (b)
    
    Appendix No. 1 to License Agreement No. 2004-85 between PGS Exploration
(UK) Ltd. and Endeavour Operating Corporation, dated January 10, 2005
(Incorporated by reference to Exhibit 10.1 to our Current Report on Form
8-K (Commission File No. 001-32212) filed on January 11, 2005.)




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##### Table of Contents



Exhibit
    
    Description10.21
    
    Share Sale and Purchase Agreement between Lundin Petroleum B.V. and
Endeavour Energy Norge AS dated October 12, 2004 (Incorporated by
reference to Exhibit 2.1 to our Current Report on Form 8-K (Commission
File No. 001-32212) filed on October 14, 2004.)10.22
    
    Form of Conditional Offer to Buy Shares of Stock to the Minority
Stockholders of OER oil AS (Incorporated by reference to Exhibit 2.1 to
our Current Report on Form 8-K (Commission File No. 001-32212) filed on
November 15, 2004.)10.23
    
    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) on January 5, 2005.)10.24
    
    Form of One-Year Restricted Stock 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 10.2 to our Current
Report on Form 8-K (Commission File No. 001-32212) on January 5, 2005.)10.25
    
    Form of Three-Year Restricted Stock 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 10.3 to our Current
Report on Form 8-K (Commission File No. 001-32212) on January 5, 2005.)10.26
    
    Form of Stock Grant 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 10.4 to our Current Report on Form 8-K (Commission
File No. 001-32212) filed on January 5, 2005.)10.27
    
    License Agreement No. 2004-85 between PGS Exploration (UK) Ltd. and
Endeavour Operating Corporation, dated December 21, 2004 (Incorporated by
reference to Exhibit 10.2 to our Current Report on Form 8-K (Commission
File No. 001-32212) filed on January 11, 2005.)10.28
    
    Restricted Stock Award Agreement between Endeavour International
Corporation and Lance Gilliland dated effective August 26, 2005
(Incorporated by reference to Exhibit 10.1 to our Current Report on Form
8-K (Commission File No. 001-32212) filed on September 19, 2005.)10.29
    
    Nonstatutory Stock Option Agreement between Endeavour International
Corporation and Lance Gilliland dated effective August 26, 2005
(Incorporated by reference to Exhibit 10.2 to our Current Report on Form
8-K (Commission File No. 001-32212) filed on September 19, 2005.)10.30
    
    Agreement for Sale and Purchase of Interest dated 8th December 2005
between Petro-Canada UK Limited and Endeavour Energy UK Limited
(Incorporated by reference to Exhibit 10.1 to our Current Report on Form
8-K (Commission File No. 001-32212) on December 13, 2005.)




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##### Table of Contents



Exhibit
    
    Description10.31
    
    Agreement for the Sale and Purchase of 94.77% Interest in PHT Partners,
L.P. dated April 22, 2005 (Incorporated by reference to Exhibit 2.1 to our
Current Report on Form 8-K (Commission File No. 001-32212) on April 27,
2005.)14.1
    
    Code of Ethics of Endeavour International Corporation. (Incorporated by
reference to Exhibit 14.1 of our Annual Report on Form 10-KSB (Commission
File No. 000-33439) for the year ended December 31, 2003)*21.1
    
    List of Subsidiaries.*23.1
    
    Consent of Independent Registered Public Accounting Firm  KPMG LLP.*23.2
    
    Consent of Independent Registered Public Accounting Firm  LJ Soldinger
Associates LLP.*23.3
    
    Consent of Independent Reserve Engineers  Gaffney, Cline & Associates Ltd.*31.1
    
    Certificates of William L. Transier, Co-Chief Executive Officer, pursuant
to Rule 13a-14(a) of the Securities and Exchange Act of 1934, as amended.*31.2
    
    Certificate of John N. Seitz, Co-Chief Executive Officer, pursuant to Rule
13a-14(a) of the Securities and Exchange Act of 1934, as amended.*31.3
    
    Certificate of Lance Gilliland, Chief Accounting Officer, pursuant to Rule
13a-14(a) of the Securities and Exchange Act of 1934, as amended.*31.4
    
    Certificate of Robert L. Thompson, Chief Accounting Officer, pursuant to
Rule 13a-14(a) of the Securities and Exchange Act of 1934, as amended.*32.1
    
    Certification of William L. Transier, Co-Chief Executive Officer, pursuant
to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.*32.2
    
    Certificate of John N. Seitz, Co-Chief Executive Officer, pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.*32.3
    
    Certification of Lance Gilliland, Chief Financial Officer, pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.*32.4
    
    Certification of Robert L. Thompson, Chief Accounting Officer, pursuant to
18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
 
 *
    
    Filed herewith.
    
    Identifies management contracts and compensatory plans or arrangements.