10-K

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, 2007

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

(Exact name of registrant as specified in its charter)

Nevada	88-0448389
(State or other jurisdiction of incorporation or	(I.R.S. Employer Identification No.)
organization)

1001 Fannin Street, Suite 1600, Houston, Texas 77002
  (Address of principal executive offices)     (Zip code)

(713) 307-8700
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class of Stock	Name of Each Exchange on Which Registered
Common Stock - $0.001 par value per share	American Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act. o  Yes þ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. o Yes   þ No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ Yes   o No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (check one):

Large accelerated filer o     Accelerated filer þ     Non-accelerated filer o      Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes   þ No

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was $158 million computed by reference to the closing sale price of the registrant’s common stock on the American Stock Exchange on June 30, 2007, the last business day of the registrant’s most recently completed second fiscal quarter.

As of March 7, 2008, 127,540,358 shares of the registrant’s common stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:

Portions of the registrant’s definitive proxy statement relating to the 2008 Annual Meeting of Stockholders, which will be filed within 120 days of December 31, 2007, are incorporated by reference into Part III of this Form 10-K.

Table of Contents

Part I	1
Item 1. Business	1
Item 1A. Risk Factors	10
Item 1B. Unresolved Staff Comments	21
Item 2. Properties	21
Item 3. Legal Proceedings	23
Item 4. Submission of Matters to a Vote of Security Holders	23
Part II	24
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	24
Item 6. Selected Financial Data	25
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 7A. Quantitative and Qualitative Disclosures About Market Risk	43
Item 8. Financial Statements and Supplementary Data	46
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.	92
Item 9A. Controls and Procedures	92
Item 9B. Other Information	95
Part III	95
Item 10. Directors, Executive Officers and Corporate Governance of the Registrant	95
Item 11. Executive Compensation	95
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters	95
Item 13. Certain Relationships and Related Transactions, and Director Independence	95
Item 14. Principal Accounting Fees and Services	96
Part IV	96
Item 15. Exhibits and Financial Statement Schedules	96
SIGNATURES	97
Restricted Stock Award Agreement
Restricted Stock Award Agreement
Stock Option Agreement
Stock Option Agreement
Code of Conducts
List of Subsidiaries
Consent of Independent Registered Public Accounting Firm - KPMG LLP
Consent of Independent Reserve Engineers - Netherland, Sewell & Associates, Inc.
Certification of William L. Transier, CEO, Pursuant to Rule 13a-14(a)
Certification of J. Michael Kirksey, CFO, Pursuant to Rule 13a-14(a)
Certification of Robert L. Thompson, CAO, Pursuant to Rule 13a-14(a)
Certification of William L. Transier, CEO, Pursuant to Section 906
Certification of J. Michael Kirksey, CFO, Pursuant to Section 906
Certification of Robert L. Thompson, CAO, Pursuant to Section 906

Quantities of natural gas are expressed in this report in terms of thousand cubic feet (Mcf) and million cubic feet (MMcf). Oil is quantified in terms of barrels (Bbls) and thousands of barrels (Mbbls). Natural gas is compared to oil in terms of barrels of oil equivalent (BOE), thousand barrels of oil equivalent (MBOE) or million barrels of oil equivalent (MMBOE). One barrel of oil is the energy equivalent of six Mcf of natural gas. With respect to information relating to our working interest in wells or acreage, “net” oil and gas wells or acreage is determined by multiplying gross wells or acreage by our working interest therein.

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Endeavour International Corporation

Part I

Item 1. Business

Endeavour International Corporation is an independent oil and gas company engaged in the acquisition, exploration and development of energy reserves. Unless the context otherwise requires, references to “Endeavour”, “we”, “us” or “our” mean Endeavour International Corporation and our consolidated subsidiaries.

General

When Endeavour was founded in 2004, we aimed to become a leading upstream company with an exploration focus primarily in the North Sea. Over the last several years, we have strived to further the strategies we laid out in 2004 with a balance of investments in three areas – exploration, exploitation and acquisitions.

The acquisitions we have completed over the last several years have been instrumental in our progress. By the end of 2004, we had acquired producing properties in Norway. Our producing assets received a significant boost with the acquisition of producing properties in the UK in late 2006. In just a few years, these acquisitions have allowed us to move from our concept of a North Sea strategy to 8.7 MMBOE of proved reserves, approximately 9,000 BOE per day of production in the North Sea and poised for continued growth from a foundation of production, reserves and exploration acreage.

With acquisitions providing one leg of the foundation for our North Sea strategy, we’ve also built a sound inventory of exploration acreage and drillable prospects. We’ve had success in the licensing round process in both the UK and Norway and pursued various farm-in and license transfer opportunities to build our significant exploration acreage and potential. At December 31, 2007, we held interests in 31 licenses in the UK, 16 licenses in Norway and one exploration license in Ireland. During 2006, two exploratory wells, the Cygnus and Columbus prospects, were successfully tested as gas discoveries and an appraisal well was drilled for the Columbus prospect in 2007.

We also focused on exploitation activities to maximize the contribution of our assets. Development drilling and commercialization activities were completed at the Enoch field allowing for production to commence in mid 2007. Further, a significant project that began gas production at our Njord field was completed at the end of 2007.

As we look ahead to 2008, we expect to continue this balanced approach to our North Sea strategy. We are focused on exploitation of our producing assets through capital expenditures at the Endeavour-operated Renee and Rubie fields, further development activities at Columbus and Cygnus and exploration drilling activities on prospects such as Rochelle and Agat. We will also continue to pursue acquisitions, farm-in opportunities, farm-out opportunities and license interest exchanges that we believe might solidify our production base, provide cash flow for drilling activities and increase return for shareholders.

The increases in revenues, operating profit (loss) and daily production during 2007 reflect the contributions of our acquisitions and exploitation efforts. The following table sets forth some of our historical consolidated financial data.

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Summary Financial Information (1)
(Amounts in thousands, except per share data and BOE data)	Year Ended December 31,
	2007			2006			2005
Revenues	$	176,064		$	54,131		$	38,656
Operating Profit (Loss)		38,292			(4,374	)		(28,089	)
Net Loss to Common Shareholders		(60,315	)		(8,829	)		(31,531	)
Net Income (Loss) as Adjusted (2)		(10,907	)		(21,322	)		(33,355	)
Net Loss Per Common Share – Basic and Diluted		(0.49	)		(0.10	)		(0.42	)
Earnings (Loss) per share as Adjusted (2)		(0.09	)		(0.25	)		(0.45	)
Adjusted EBITDA (2)		124,155			9,233			8,157
Discretionary cash flow (2)		112,973			10,663			6,259
Daily Production (BOE)		8,969			2,760			2,072
Summary Balance Sheet Data:
Working Capital		37,198			47,431			49,638
Total Assets		747,623			774,470			186,966
Debt		266,250			306,250			81,250
Convertible Preferred Stock		125,000			125,000			—
Equity		70,149			116,828			40,344

(1)	The above data should be read in conjunction with “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Consolidated Financial Statements and Notes thereto included elsewhere herein.
(2)	Reconciliations of net income (loss) to the non-GAAP financial measures, net income as adjusted, Adjusted EBITDA and discretionary cash flow, are included in “Non-GAAP Measures” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Throughout our growth over the last several years, we have continued to impose financial discipline on our operations. Cash flow provided by (used in) operations was $128.5 million in 2007 versus $(14.1) million in 2006 and $28.0 million in 2005. Discretionary cash flow was $113.0 million in 2007 compared to $10.7 million and $6.3 million in 2006 and 2005, respectively. This significant increase in discretionary cash flow allowed us to repay $40 million in debt while spending $88 million in capital expenditures 2007. In January 2008, we completed the refinancing of certain debt utilizing a strategic investment by the Smedvig Family Office in Norway. Included in this refinancing were: the repayment of our Second Lien Term Loan, issuance of $40 million under a private offering of 11.5% guaranteed convertible bonds, and borrowing of $25 million under a Junior Credit Facility. We also received a commitment an additional $60 million for future investments with us.

Net loss for 2007 was $60.3 million, or $0.49 per share, reflecting the significant unrealized loss on the mark-to-market of commodity derivatives. For 2006 and 2005, net loss was $8.8 million and $31.5 million, respectively, or $0.10 per share and $0.42 per share, respectively. The net loss for 2007 and 2006 reflects a significant unrealized gain (losses) on the application of mark-to-market accounting - effectively pulling forward into current periods the non-cash gains and losses from commodity price fluctuations relating to all future delivery periods. Net loss as adjusted for 2007 would have been $10.9

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million or $0.09 per share without the effect of derivative transactions and currency impacts of deferred taxes as compared to net loss as adjusted of $21.3 million or $0.25 per share in 2006 and net loss as adjusted of $33.4 million or $0.45 per share in 2005. Adjusted EBITDA increased to $124.1 million in 2007 from $9.2 million and $8.1 million in 2006 and 2005, respectively.

Business Strategy

Our goal is to create value for our investors by increasing reserves, production and cash flow utilizing a balanced approach between exploration, exploitation and acquisitions. Combined with a sound financial discipline, we believe this balanced approach manages risk and results in an achievable and sustainable business plan which will increase shareholder value over the long term. Our North Sea focus stems from our belief that the continued restructuring of portfolios by larger energy companies away from the more mature but prolific North Sea will create opportunities for smaller companies. As a result, we expect the region to remain attractive with additional opportunities becoming available as these larger energy companies divest certain North Sea assets to focus in other regions and as government authorities continue their push to move unevaluated acreage and undeveloped discoveries into the hands of new, more assertive players.

Exploitation

Exploitation of discovered or acquired reserves is a key part of our strategy. We believe the North Sea benefits from existing infrastructure with ever-increasing spare capacity which lends itself to attractive, economically viable approaches to the further development of identified reserves. We believe our expertise and experience will allow us to develop such opportunities on a cost-effective and profitable manner. Our existing producing and discovered assets form a foundation around which we can move aggressively toward exploiting opportunities that we develop whether through exploration or acquisition.

Acquisitions

In keeping with our business focus, we intend to continue to pursue strategic acquisitions of new properties and licenses that expand our current production, exploitation and exploration base, are accretive to shareholder value, provide an attractive rate of return, increase the scope and scale of our operations and offer unrealized reserve potential. Further consolidation of the independent sector in the North Sea should also create more opportunities for us to acquire and develop attractive assets and prospects. In addition, by pursuing strategic acquisitions, we expect to redeploy cash flows from acquired producing assets to fund our exploration drilling program, as well as development of new discoveries.

Exploration

We also believe the North Sea contains significant numbers of new exploration opportunities with material reserve potential and that the existing and available infrastructure in the North Sea region further enhances the near-term commercial potential of opportunities in this region. We intend to grow our reserves and production through exploratory activities on our existing acreage, acreage acquired in future licensing rounds and acreage obtained through farm-ins and swaps with other industry participants. These efforts will be aided by our access to the 3-D MegaSurvey and North Sea Digital Atlas data, compiled by PGS Exploration (UK) Ltd, covering the continental shelves of the United Kingdom, Norway and the Netherlands to efficiently and effectively identify new exploration opportunities.

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Properties

At the end of 2007, our exploration portfolio consists of production licenses in the United Kingdom sector of the North Sea covering approximately 0.9 million gross acres, approximately 0.9 million gross acres in the Norwegian Continental Shelf, or NCS, and 0.2 million gross acres in Ireland. Within our acreage position, we have interests in licenses covering eight producing fields in the UK and two producing fields in Norway.

As of December 31, 2007, we had proved reserves of 20,246 MMcf of natural gas and 5,340 Mbbls of crude oil, condensate and NGLs, for a combined 8,713 MBOE. Sixty percent of our proved reserves are located in the UK at December 31, 2007, reflecting the Enoch and Talisman acquisitions in 2006. Those acquisitions are also responsible for the significant increases in reserves from 2005 to 2006.

As of December 31, 2007, we had the following producing licenses:

			Endeavour
			Working
Field Name	Country	Operator	Interest
Alba	United Kingdom	Chevron	2.25%
Bittern	United Kingdom	Shell	2.42%
Brage	Norway	Norsk Hydro	4.4%
Caledonia	United Kingdom	Chevron	2.83%
Enoch	United Kingdom	Talisman	8%
Goldeneye	United Kingdom	Shell	7.029%
Ivanhoe, Rob Roy, Hamish	United Kingdom	Hess	23.46%
Njord	Norway	Norsk Hydro	2.5%
Renee	United Kingdom	Endeavour	77.5%
Rubie	United Kingdom	Endeavour	40.78%

The Goldeneye field contributed approximately 51% of our 2007 production at 1,677 MBOE and a quarter of our proved reserves, 2,117 MBOE, at the end of the year. Goldeneye is predominately gas and represented over 90% of our gas production in 2007. The Njord and Alba fields each contributed approximately 10% of our 2007 production with 375 and 349 MBOE, respectively. These two fields each had approximately 15% of our proved reserves at December 31, 2007 with 1,277 and 1,220 MBOE at Alba and Brage, respectively. While the Njord field represented 2,242 MBOE of our proved reserves at December 31, 2007, its share of our production for 2007 was less 10%. With the completion of the gas export project at Njord in December 2007, Njord is expected to increase its production in 2008 thereby gaining a larger percentage of our total gas production.

Since our change in focus to the North Sea, we accumulated 31 exploration licenses in the UK, 16 exploration licenses in Norway and one in Ireland. Our undeveloped acreage covers 1.8 million gross acres, with approximately 45% each in the UK and Norway. Our previous successful exploration activities at Columbus and Cygnus continue to move forward in development plans and an appraisal well and sidetrack was drilled at the Columbus prospect during 2007. We expect our exploration efforts in 2008 to result in the drilling of at least five prospects.

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Reserves

For 2007, our proved oil and gas reserves were estimated by Netherland, Sewell & Associates, Inc. For 2006, our proved oil and gas reserves in the United Kingdom were also estimated by Netherland, Sewell & Associates, Inc. Our proved oil and gas reserves in Norway for 2006 and 2005 were estimated by independent reserve engineers.

Our internal technical staff, or those of the operator, evaluate all technical data available on each field including production data, wells logs, pressure data, petrophysical analysis, fluid properties, seismic data, mapping based on seismic interpretations and well control along with offset well data to estimate the reserves in place in the reservoir and ultimately estimate the quantity of remaining recoverable proved oil and gas reserves attributable to a specific property. We provide our analysis and data to our external reservoir engineers for their independent estimates using the SEC definitions of proved reserves. The external engineers then perform their own analysis of the same raw data including analysis of all production data, pressure data, well logs, petrophysical analysis, fluid analysis, seismic data and mapping based on that seismic data to determine their own reserves in place and ultimately estimate the quantity of proved oil and gas reserves attributable to a specific property.

Our proved oil and gas reserves at December 31, 2007, 2006, and 2005 included the following:

	Oil		Gas		Oil Equivalents
	(MBbls)		(MMcf)		(MBOE)
2007:
United Kingdom		3,284		11,812		5,252
Norway		2,056		8,434		3,461
		5,340		20,246		8,713
2006:
United Kingdom		4,566		17,172		7,428
Norway		1,186		7,673		2,465
		5,752		24,845		9,893
2005:
Norway		1,164		6,297		2,214

Planned Exploration and Development Expenditures

We anticipate spending approximately $90 million during 2008 to fund oil and gas exploration and development in the North Sea. An estimated $40 million will be allocated to drilling at least five exploration prospects in the North Sea. Approximately 60 percent of this exploration budget will be spent in Norway with the balance dedicated to drilling in the UK. In Norway, we expect to drill our first well as an operator with the Jade prospect on PL270 slated to begin drilling during the fourth quarter of 2008. The area is the site of the two Agat natural gas discoveries and the test will set out to identify additional reserves in support of commercial development. Most of the remaining exploratory wells are outside operated.

Some $20 million is expected to be spent for development drilling and facilities improvements to maintain maximum production levels. Another $30 million will fund our efforts in the UK to move the

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Cygnus and Columbus discoveries toward field development plans and for further exploitation of undeveloped reserves in the Renee field on Block 15/27.

The timing and order of this program will be determined by the completion of ongoing technical work, partner approvals and rig scheduling for individual prospects. We may increase or decrease our planned activities for 2008 or high grade our exploratory prospects, depending upon drilling results, potential acquisition candidates, product prices, the availability of capital resources, and other factors affecting the economic viability of such activities.

Executive Officers

Name	Age	Position
William L. Transier	53	Chief Executive Officer, President and Chairman of the Board of Directors
J. Michael Kirksey	52	Executive Vice President, Chief Financial Officer
Bruce H. Stover	59	Executive Vice President, Operations and Business Development
John G. Williams	58	Executive Vice President, Exploration
Robert L. Thompson	61	Senior Vice President, Chief Accounting Officer and Corporate Planning

The following is a brief summary of the business experience of each of the above-named individuals:

William L. Transier – Mr. Transier has served as our chief executive officer, president and chairman of the board since September 2006. Prior to that, he served as our co-chief executive officer and director since our founding in February 2004. From November 2003 to February 2004, Mr. Transier was a founder and co-chief executive officer of NSNV, Inc. From 1999 to 2003, Mr. Transier was executive vice president and chief financial officer for Ocean Energy, Inc., an oil and gas exploration and production company, prior to its merger with Devon Energy Corporation. Mr. Transier began his career in public accounting with KPMG LLP, an international audit and business strategy consulting firm, where he rose to the title of partner and headed its energy practice. Mr. Transier is a director of Reliant Energy Inc., Cal Dive International, Inc. and Helix Energy Solutions Group, Inc. He is a former chairman of the Natural Gas Supply Association, and former chairman of the Texas Department of Information Resources, having been appointed to that post by Texas Governor Rick Perry.

J. Michael Kirksey – Mr. Kirksey joined us on September 26, 2007. Mr. Kirksey has served as Chief Financial Officer from 2006 through 2007 for Sirva, Inc., a moving and relocation company located in Chicago, Illinois. From 2004 through 2005, Mr. Kirksey was employed as Chief Financial Officer for ION Geophysical Corporation, an oil and gas technical services company located in Houston, Texas. Mr. Kirksey was Chief Executive Officer from 2000 to 2002 and Chief Financial Officer from 1997 to 2000 of Metals USA, Inc., a distributor and service provider of metal and metal components located in Houston, Texas. Mr. Kirksey began his career at Arthur Andersen & Co., an international audit and business strategy consulting firm, where he spent 13 years.

Bruce H. Stover – Mr. Stover has served as our executive vice president, operations and business development since February 2004. From 1997 to 2003, Mr. Stover was senior vice president, worldwide business development for Anadarko Petroleum Corporation, an oil and gas exploration and production company. Mr. Stover joined Anadarko Petroleum Corporation in 1980 as chief engineer and in 1989 he was named president and general manager for Anadarko Algeria Corporation where he led the company’s start-up operations in Algeria. In 1993, he was named vice president, acquisitions and in 1997 that position evolved into vice president, worldwide business development. Mr. Stover began his career with

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Amoco Production Company, an oil and gas exploration and production company, in 1972. A member of the Society of Petroleum Engineers, he is active in a number of organizations at the University of Oklahoma including the Board of Visitors-College of Engineering, the Dean’s Advisory Board-School of Petroleum & Geological Engineering and the President’s Associates Council.

John G. Williams – Mr. Williams joined us on October 1, 2007. Mr. Williams has served as Exploration Vice President for Index Oil & Gas Inc. from August 2006 until September 2007. Index Oil & Gas Inc. is a Houston, Texas-based independent energy company. Prior to joining Index Oil & Gas Inc., Mr. Williams was with Conoco and then ConocoPhillips from 1980 until 2006, where he was Manager, Exploration Geoscience from 2003, and Global Chief Geophysicist prior to that.

Robert L. Thompson – Mr. Thompson has served as our vice president, chief accounting officer and corporate planning since March 2004; he was promoted to senior vice president on June 5, 2007. From 2001 to 2003 Mr. Thompson served as vice president and controller of Ocean Energy, Inc., an oil and gas exploration and production company, and from 2000 to 2001 Mr. Thompson served as senior consultant on finance and economics at Cambridge Energy Research Associates, an advisory firm focused on the energy industry. Mr. Thompson spent the majority of his career with Oryx Energy Company, an oil and gas exploration and production company, and its predecessors. His positions there included Director-Financial Analysis, Director-Business Planning and Acquisitions, and Controller and Vice President-Planning. Mr. Thompson is a certified public accountant.

Company History

Endeavour International Corporation (a Nevada corporation formed in 2000) is an independent oil and gas company engaged in the acquisition, exploration and development of energy reserves and, since February 26, 2004, we have been geographically focused in the North Sea. In 2003, our operations were focused on oil and gas properties in Louisiana, Mississippi and Oklahoma.

During 2004, we significantly transformed the nature and scope of our business. On February 26, 2004, we completed a series of transactions that provided:

• 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 our new strategy; and

• a restructuring which resulted in the sale of all our interests in U.S. oil and gas properties.

The transformed company, renamed Endeavour International Corporation, emerged with a business strategy firmly focused on exploration, production and development in the North Sea. Throughout 2004, we made significant strides in our goal to capitalize on opportunities in the North Sea. Simultaneous with the restructuring in February 2004, we completed a private offering of common stock for net proceeds of $46 million. This offering financed the initial transactions in the transformation and provided capital for us to proceed with our business plan for the remainder of 2004. Throughout 2004 and 2005, we sold all remaining U.S. oil and gas properties and our partnership interests in Thailand thereby optimizing the assets of our predecessor company in support of our North Sea drilling plans and strategy.

In November 2004, we purchased a 76.66% majority interest in OER oil AS (“OER”), a privately held Norwegian exploration and production company based in Oslo (the “OER Acquisition”). In January 2005, we purchased the remaining 23.34% interest in OER from twenty-four minority interest holders. Through this acquisition, we hold working interests in the Agat, Brage and Njord fields.

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In May 2006, we announced our largest acquisition to date – the Talisman Acquisition. On November 1, 2006, we completed this acquisition of all of the outstanding shares of Talisman Expro Limited for US $366 million, after purchase price adjustments and expenses. As a result of the Talisman Acquisition, we acquired interests in eight fields in the United Kingdom sector of the North Sea and over seven million BOE of proved reserves as of the closing date. The Talisman Acquisition was financed in four parts:

• 37.8 million shares of common stock in the fourth quarter of 2006 for $89 million in gross proceeds;

• 125,000 shares of Series C Convertible Preferred Stock for $125 million in gross proceeds;

• $150 million in a borrowing base debt facility, before financing costs paid of $3.2 million; and

• $75 million in a second lien term loan, before financing costs paid of $2.6 million.

In the second quarter of 2006, we purchased an eight percent interest in the Enoch Field in the North Sea for approximately $11.7 million. The field is one of the first discoveries to be developed along the median line between the United Kingdom and Norway after the ratification of the UK/Norway Framework Treaty.

While working to complete and integrate these acquisitions, we also moved forward in our drilling program. During 2004 and 2005, we gained approval in the UK and Norway to act as an operator or licensee in both countries and began participating in the license round process. The award of licenses to us in 2004 in both the UK and Norway allowed us to initiate our multi-year drilling program using funds raised by issuing $81.25 million senior convertible notes in early 2005. We’ve also pursued various farm-in and license transfer opportunities to build acreage and potential and spread the risk of exploration drilling among multiple prospects. From 2005 through 2007, we participated in 25 wells, including five where we served as operator. Together with our partners, we have completed the development project at the Enoch field and a project to begin gas production at our Njord field. With the successful exploration drilling at Columbus and Cygnus, we are working on development plans of both projects and a successful appraisal well and sidetrack was drilled on the Columbus prospect in 2007.

Environmental

Endeavour was established on a commitment to find and develop energy resources in a manner that protects the health and safety of people and preserves the quality of the environment. Adhering to high performance standards in the areas of health, safety and the environment (“HSE”) is an integral part of the operations of the Company in its efforts to end each day “injury and incident free”.

Our operations in the UK portions of the North Sea are subject to numerous UK and European Union laws and regulations relating to environmental and safety. Environmental matters are addressed both before oil and gas production activities commence and during the exploration and production activities. Before a UK licensing round begins, the Department for Business, Enterprise & Regulatory Reform (the “DBERR”) (previously called the Department of Trade and Industry or “DTI”) will consult with various public bodies that have responsibility for the environment. Applicants for production licenses are required to submit a statement of the general environmental policy of the operator in respect of the contemplated license activities and a summary of its management systems for implementation of that policy and how those systems will be applied to the proposed work program. Additionally, the Offshore Petroleum Production and Pipelines (Assessment of Environmental Effects) Regulations 1999 require the Secretary of State to exercise his licensing powers under the UK Petroleum Act in such a way to ensure that an environmental assessment is undertaken and considered before consent is given to certain projects.

In the Norwegian portions of the North Sea, our operations are subject to the environmental and safety requirements of the Norwegian Petroleum Act 1996, as well as other laws and regulations. Our

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production licenses in Norway incorporate the environmental and safety requirements provided in the Norwegian Petroleum Act, and failure to comply with such requirements can result in the imposition of fines and penalties as well as the potential suspension or revocation of our authorizations to operate.

Regulation

The exploration, production and sale of oil and gas are extensively regulated by governmental bodies. Applicable legislation is under constant review for amendment or expansion. Oil and gas mineral rights may be held by individuals, corporations or governments having jurisdiction over the area in which such mineral rights are located. As a general rule, parties holding such mineral rights grant licenses or leases to third parties to facilitate the exploration and development of these mineral rights. The terms of the leases and licenses are generally established to require timely development. Notwithstanding the ownership of mineral rights, the government of the jurisdiction in which mineral rights are located generally retains authority over the manner of development of those rights.

Competition

The petroleum and natural gas industry is highly competitive. Numerous independent oil and gas companies, oil and gas syndicates and major oil and gas companies actively seek out and bid for oil and gas properties as well as for the services of third party providers, such as drilling companies, upon which we rely. Petroleum and natural gas producers also compete with other suppliers of energy and fuel to industrial, commercial and individual customers. Competitive conditions may be substantially affected by various forms of energy legislation and/or regulation considered from time to time by the governments and/or agencies thereof and other factors out of our control including, international political conditions, overall levels of supply and demand for oil and gas, and the markets for synthetic fuels and alternative energy sources.

Significant Customers

Our oil sales are to a limited number of customers, each of which account for more than 10% of revenue: StatoilHydro and Shell International Trading and Shipping Company, Limited and our gas and natural gas liquids sales are to StatoilHydro, Shell UK Limited and Esso Exploration and Production UK Limited.

Employees

As of March 7, 2008, we have 60 full-time employees. We believe that we maintain good relationships with our employees, none of whom are covered by a collective bargaining agreement.

Offices

Our principal executive offices are located at 1001 Fannin Street, Suite 1600, Houston, Texas 77002, and our telephone number is (713) 307-8700. Most of our executive officers are located in our offices at 114 St. Martin’s Lane, London WC2N 4BE England. We also have offices in Aberdeen in the United Kingdom and Oslo, Norway.

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Endeavour International Corporation

Available Information

We file annual and quarterly financial reports, as well as interim updates of a material nature to investors, with the Securities and Exchange Commission (the “Commission”). The public may read and copy any materials that we file with the Commission at the Commission’s Public Reference Room at 100 Fifth Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an internet site at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. We make available free of charge our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act on our internet website at www.endeavourcorp.com, as soon as reasonably practicable after we electronically file or furnish such material with or to the Commission. Information contained on our website is not part of this annual report.

Financial Information about Segment and Geographical Areas

Our revenues and long-lived assets by geographic area is included in Note 18 to our consolidated financial statements and incorporated herein by reference.

Average Sales Prices and Production Costs by Geographical Area

Information on average sales prices and production costs by geographic area is included in Item 7 and incorporated herein by reference.

Item 1A. Risk Factors

The information contained in this Annual Report on Form 10-K includes certain forward-looking statements. The words “may,” “will,” “expect,” “anticipate,” “believe,” “continue,” “estimate,” “project,” “intend,” and similar expressions used in this Form 10-K are intended to identify forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. You should not place undue reliance on these forward-looking statements, which speak only as of the date made. We undertake no obligation to publicly release the result of any revision of these forward-looking statements to reflect events or circumstances after the date they are made or to reflect the occurrence of unanticipated events. You should also know that such statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions. Should any of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may differ materially from those included within the forward-looking statements. The following material risk factors, among others, may affect our financial condition and results of operations.

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Risks related to our business

Our ability to produce commercial 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.

Our business of exploring, developing and producing oil and gas involves a substantial risk of investment loss. Drilling oil and gas wells involves the risk that the wells may be unproductive or that the wells, although productive, do not produce oil or gas in economic quantities. Other hazards, such as unusual or unexpected geological formations, pressures, fires, blowouts, loss of circulation of drilling fluids, or other conditions may substantially delay or prevent completion of any well. This could result in a total loss of our investment in a particular property. Certain of our operating areas may be subject to severe weather conditions which could adversely impact our operations. A productive well may become uneconomic if water or other substances are encountered, which impair or prevent the production of oil and gas from the well. In addition, production from any well may be unmarketable if it is impregnated with water or other deleterious substances. We cannot assure you that oil and gas will be produced from the properties in which we have interests, nor can we assure the marketability of oil and gas that may be acquired or discovered. Numerous factors are beyond our control, including the proximity and capacity of oil and gas pipelines and processing equipment, market fluctuations of prices, taxes, royalties, allowable production and environmental regulations. We cannot predict how these factors may affect our business.

We may not be able to replace production with new reserves which could cause our production and reserves to decline.

Our future oil and gas production is highly dependent upon our level of success in finding or acquiring additional reserves. In general, the volume of production from oil and gas properties declines as reserves are depleted. The decline rates depend on reservoir characteristics. Our reserves will decline unless we acquire properties with proved reserves or conduct successful development and exploration drilling activities.

We have limited control over the availability or cost of drilling rigs and other equipment and services which are essential to our operations, and market conditions or transportation impediments may hinder access to oil and gas markets or delay production.

We have limited control over the availability and cost of drilling rigs and other services and equipment which are necessary for us to carry out our exploration and development activities. Procuring a sufficient number of drilling rigs is expensive and difficult as the market for such rigs is highly competitive. The cost of all oil field services has increased significantly during the past year as oil and gas companies have sought to increase production. There is no assurance that we will be able to contract for such services or equipment on a timely basis or that the cost of such services and equipment will remain at a satisfactory or affordable level. Shortages or the high cost of drilling rigs, equipment, supplies or personnel could delay or adversely affect our exploration and development operations, which could have a material adverse effect on business, financial condition or results of operations.

Market conditions, the unavailability of satisfactory oil and natural gas transportation or the location of our drilling operations may hinder our access to oil and gas markets, or delay production or increase our expenses. The availability of a ready market for oil and gas production depends on a number of factors,

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including the demand for and supply of oil and gas and the proximity of reserves to pipelines and terminal facilities.

Our debt level could negatively impact our financial condition, results of operations and business prospects.

As of December 31, 2007, we had $266 million in outstanding indebtedness. Our level of indebtedness could have important consequences on our operations, including:

• placing restrictions on certain operating activities;

• making it more difficult for us to satisfy our obligations under our indentures or the terms of our other debt and increasing the risk that we may default on our debt obligations;

• requiring us to dedicate a substantial portion of our cash flow from operating activities to required payments on debt, thereby reducing the availability of cash flow for working capital, capital expenditures and other general business activities;

• limiting our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions and other general business activities;

• decreasing our ability to withstand a downturn in our business or the economy generally; and

• placing us at a competitive disadvantage against other less leveraged competitors.

We may not have sufficient funds to repay our outstanding debt. If we are unable to repay our debt out of cash on hand, we could attempt to refinance such debt, sell assets or repay such debt with the proceeds from an equity offering. We cannot assure you that we will be able to generate sufficient cash flow from operating activities to pay the interest on our debt or that future borrowings, equity financings or proceeds from the sale of assets will be available to pay or refinance such debt. Factors that will affect our ability to raise cash through an offering of our capital stock, a refinancing of our debt or a sale of assets include financial market conditions, our market value and our operating performance at the time of such offering or other financing. We cannot assure you that any such offering, refinancing or sale of assets can be successfully completed, which could have a material adverse effect on our operations and negatively impact our exploration program.

We have outstanding $81.25 million of 6.00% convertible senior notes due 2012. Upon specified change of control events, each holder of those notes may require us to purchase all or a portion of the holder’s notes at a price equal to 100% of the principal amount, plus accrued and unpaid interest, if any, up to but excluding the date of purchase, plus in certain circumstances, a makewhole premium. In early 2008, under a private offering, we issued $40 million of 11.5% guaranteed convertible bonds due 2014 to a company controlled by the Smedvig family office of Norway. If we undergo a “change of control” the holders of these bonds have the right, subject to certain conditions, to redeem the bonds and accrued interest.

At December 31, 2007, we also have outstanding $110 million under a Secured Revolving Loan and a Letter of Credit Facility Agreement. An additional $75 million, outstanding under a Second Lien Credit and Guarantee Agreement, was repaid in January 2008. At the same time, we also borrowed $25 million under a Junior Facility Agreement (together, the “Debt Agreements”). Upon specified change of control events, each lender under the Debt Agreements may cancel the facility and declare outstanding loans, plus accrued and unpaid interest, outstanding letters of credit and other outstanding fees, if any, due and payable. We cannot assure you we would have sufficient financial resources to purchase the notes for cash or repay the lenders under our Debt Agreements upon the occurrence of a change of control. In addition, events involving a change of control may result in an event of default under other debt we may incur in the future.

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Variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

Certain of our borrowings, primarily borrowings under our bank facilities, are at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed would remain the same, and our net income would decrease. A 0.25% change in interest rates would result in a $0.4 million change in our annual interest expense.

We will not be the operator of all of the interests we own or acquire, and therefore we may not be in a position to control the timing of development efforts, the associated costs, or the rate of production of the reserves in respect of such interests.

A significant number of our interests, including several of our producing fields, are located in blocks that we do not currently operate and as we carry out our planned drilling program, we will not serve as operator of all planned wells. As a result, we may have limited ability to exercise influence over the operations of these interests or their associated costs. Dependence on the operator and other working interest owners for these projects, and limited ability to influence operations and associated costs could prevent the realization of expected returns on capital in drilling or acquisition activities. The success and timing of development and exploitation activities on properties operated by others depend upon a number of factors that will be largely outside our control, including:

• the timing and amount of their capital expenditures;

• the availability of suitable offshore drilling rigs, drilling equipment, support vessels, production and transportation infrastructure and qualified operating personnel;

• the operator’s expertise and financial resources;

• approval of other participants to drill wells and implement other work programs;

• selection of technology; and

• the rate of production of the reserves.

If we are unable to obtain additional financing or generate sufficient operating cash flow, we may 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.

We may not have an adequate amount of financial resources to adequately fund all of our development and exploration projects. In the past, we have relied on operating cash flows, credit facility borrowings and the sale of our debt and equity securities to fund the acquisition, exploration and development of our petroleum properties. We may need to raise additional capital to continue funding these projects and to have the ability to fund additional projects. We cannot assure you that additional funding will be available to us for exploration and development of our projects or to fulfill our obligations under any agreements. We also cannot assure you that we will be able to generate sufficient operating cash flow or obtain adequate financing in the future or that the terms of any such financing will be favorable. Failure to generate such additional operating cash flow or obtain such additional financing could result in delay, postponement or cancellation of further exploration and development of our projects or the loss of our interest in our prospects. We expect to incur substantial expenditures in connection with our oil and gas exploration, development and production activities which may be in excess of operating cash flows and may require us to seek external sources of capital in the future.

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Competition for oil and gas properties and prospects is intense and some of our competitors have larger financial, technical and personnel resources that give them an advantage in evaluating, obtaining and developing properties and prospects.

We operate in a highly competitive environment for reviewing prospects, acquiring properties, marketing oil and gas and securing trained personnel. Many of our competitors are major or independent oil and gas companies that have longer operating histories in this region and employ superior financial resources which allow them to obtain substantially greater technical and personnel resources and which better enable them to acquire and develop the prospects that they have identified. We also actively compete with other companies when acquiring new leases or oil and gas properties. Our relatively small size could adversely affect our ability to obtain new licenses in the future. Specifically, competitors with greater resources than our own can have certain advantages that are particularly important in reviewing prospects and purchasing properties. Competitors may be able to evaluate, bid for and purchase a greater number of properties and prospects than our financial or personnel resources permit. Competitors may also be able to pay more for productive oil and gas properties and exploratory prospects than we are able or willing to pay. If we are unable to compete successfully in these areas in the future, our future revenues and growth may be diminished or restricted.

These competitors may also be better able to withstand sustained periods of unsuccessful drilling. Larger competitors may be able to absorb the burden of any changes in laws and regulations more easily than we can, which would adversely affect our competitive position. In addition, most of our competitors have been operating for a much longer time and have demonstrated the ability to operate through industry cycles.

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 grow successfully.

One element of our strategy is to continue to grow through selected acquisitions of additional interests in oil and gas prospects. This strategy may not be successful, however, because:

• we may not be able to identify additional desirable oil and gas prospects and acquire interests in such prospects at a desirable price;

• any acquisition of interests in oil and gas prospects may be found not to 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;

• we may not have the financial ability to complete additional acquisitions of 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.

Acquiring interests in properties for oil and natural gas exploration is speculative in nature and may not ever result in operating revenues or profits.

We cannot assure you that we will discover oil and gas in commercial quantities in our current properties or properties we may acquire in the future. Our success depends upon our ability to acquire working and revenue interests in properties upon which oil and gas reserves ultimately are discovered.

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We face risks associated with our acquisition strategy.

As part of our growth strategy, we intend to pursue strategic acquisitions of new properties that expand our current asset base and potentially offer unexploited reserve potential. This strategy involves risks and we cannot assure you that:

• we will be able to finance or consummate the transactions we select;

• any acquisitions will be profitable or be successfully integrated into our operations;

• we will be able to retain and motivate key personnel of acquired businesses;

• any acquisitions and integrations will not divert management resources; or

• any acquisitions and integrations will not have an adverse effect on our results of operations or financial condition.

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, and lower oil and gas prices may cause us to record ceiling test write-downs.

In recent decades, there have been periods of both worldwide over-production and underproduction of hydrocarbons, varying weather patterns and periods of both increased and relaxed energy conservation efforts. These conditions have resulted in periods of excess supply of, and reduced demand for, crude oil on a worldwide basis and for natural gas on a regional basis. These periods historically have been followed by periods of short supply of, and increased demand for, crude oil and natural gas. The excess or short supply of oil and gas has placed pressures on prices and has resulted in dramatic price fluctuations, even during relatively short periods of seasonal market demand. We cannot predict with any degree of certainty future oil and gas prices. Changes in oil and gas prices significantly affect our revenues, operating results, profitability and the amount and value of our oil and gas reserves. Lower prices may reduce the amount of oil and gas that we can produce economically. In an attempt to reduce our price risk, we may periodically enter into hedging transactions with respect to a portion of our expected future production.

We use the full cost method of accounting for our oil and gas operations. Accordingly, we capitalize the cost to acquire, explore and develop oil and gas properties. Under full cost accounting rules, the net capitalized costs of oil and gas properties (net of related deferred taxes), including estimated capitalized abandonment costs, may not exceed a “ceiling limit,” which is based upon the present value of estimated future net cash flows from proved reserves, discounted at 10% and excluding cash flows related to estimated abandonment costs, plus the lower of cost or fair value of unproved properties. If net capitalized costs of oil and gas properties exceed the ceiling limit, we must charge the amount of the excess to earnings as an impairment charge. This is called a “ceiling test write-down.” This charge does not impact cash flow from operating activities, but does reduce net income. The risk that we will be required to write down the carrying value of oil and gas properties increases when oil and natural gas prices are low. In addition, write-downs may occur if we experience substantial downward adjustments to our estimated proved reserves. We cannot assure you that we will not experience ceiling test write-downs in the future.

Our results of operations could be adversely affected by goodwill impairments.

As a result of mergers and acquisitions, at December 31, 2007 we had approximately $283 million of goodwill on our balance sheet. Goodwill is not amortized, but instead must be tested at least annually for impairment by applying a fair-value-based test. Goodwill is deemed impaired to the extent that its carrying amount exceeds the fair value of the reporting unit. Although our latest tests indicate that no

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goodwill impairment is currently required, future deterioration in market conditions could lead to goodwill impairments that could have a substantial negative effect on our profitability.

Derivative transactions may limit our potential gains and involve other risks.

To manage our exposure to price risk with our production, we entered into commodity derivative contracts. We may also enter into other commodity derivative contracts from time to time with respect to a portion of our future production to manage our exposure to price risk or exposure to interest rate risk. The goal of these derivative contracts is to limit volatility and increase the predictability of cash flow. These transactions may limit our potential gains if oil and gas prices were to rise over, or interest rates fall below, the prices established by the derivative contracts. In addition, derivative contracts may expose us to the risk of financial loss in certain circumstances, including instances in which:

• our production is less than expected;

• the counterparties to our contracts fail to perform under the contracts; or

• a sudden, unexpected event materially impacts oil or gas prices or interest rates.

The use of 3-D seismic is only an interpretive tool and we may be unable to recognize significant geological features.

The use of 3-D seismic is only an interpretive tool and we may be unable to recognize significant geological features due to errors in analysis of data, processing limitations or other factors. The use of seismic information does not guarantee that the wells we drill will encounter hydrocarbons, or if we do encounter hydrocarbons, that they will be present in commercial quantities.

We operate internationally and are subject to political, economic and other uncertainties.

We currently have operations in the United Kingdom, Norway and the Netherlands. We may expand our North Sea operations to other countries or regions. International operations are subject to political, economic and other uncertainties, including:

• 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.

The exploration, production and sale of oil and gas are extensively regulated by governmental bodies. Applicable legislation is under constant review for amendment or expansion. These efforts frequently result in an increase in the regulatory burden on companies in our industry and consequently an increase in the cost of doing business and decrease in profitability. Numerous governmental departments and agencies are authorized to, and have, issued rules and regulations imposing additional burdens on the oil and gas industry that often are costly to comply with and carry substantial penalties for failure to comply. Production operations are affected by changing tax and other laws relating to the petroleum industry, by constantly changing administrative regulations and possible interruptions or termination by government authorities.

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Oil and gas mineral rights may be held by individuals, corporations or governments having jurisdiction over the area in which such mineral rights are located. As a general rule, parties holding such mineral rights grant licenses or leases to third parties to facilitate the exploration and development of these mineral rights. The terms of the leases and licenses are generally established to require timely development. Notwithstanding the ownership of mineral rights, the government of the jurisdiction in which mineral rights are located generally retains authority over the manner of development of those rights.

Our insurance may not protect us against business and operating risks, including the potential that an operator of a prospect in which we participate may fail to maintain or obtain adequate insurance.

Oil and gas operations are subject to particular hazards incident to the drilling and production of oil and gas, such as blowouts, cratering, explosions, uncontrollable flows of oil, gas or well fluids, fires and pollution and other environmental risks. These hazards can cause personal injury and loss of life, severe damage to and destruction of property and equipment, pollution or environmental damage and suspension of operations. We maintain insurance for some, but not all, of the potential risks and liabilities associated with our business. If a significant accident or other event resulting in damage to our operations, including severe weather, terrorist acts, war, civil disturbances, pollution or environmental damage, occurs and is not fully covered by insurance, it could adversely affect our financial condition and results of operations. We do not currently operate all of our oil and gas properties. In the projects in which we own non-operating interests, the operator may maintain insurance of various types to cover our operations with policy limits and retention liability customary in the industry. The occurrence of a significant adverse event that is not fully covered by insurance could result in the loss of our total investment in a particular prospect and additional liability for us, which could have a material adverse effect on our financial condition and results of operations.

The cost of decommissioning is uncertain.

We expect to incur obligations to abandon and decommission certain structures in the North Sea. To date the industry has little experience of removing oil and gas structures from the North Sea. Few of the structures in the North Sea have been removed. Certain groups have been established to study issues relating to decommissioning and abandonment and how the costs will be borne. Because experience is limited, we cannot precisely predict the costs of any future decommissions for which we might become obligated.

Reserve estimates depend on many assumptions that may turn out to be inaccurate and any material inaccuracies in the reserve estimates or underlying assumptions of our assets will materially affect the quantities and present value of those reserves.

Estimating oil and gas reserves is complex and inherently imprecise. It requires interpretation of the available technical data and making many assumptions about future conditions, including price and other economic factors. In preparing such estimates, projection of production rates, timing of development expenditures and available geological, geophysical, production and engineering data are analyzed. The extent, quality and reliability of these data can vary. This process also requires economic assumptions about matters such as oil and natural gas prices, drilling and operating expenses, capital expenditures, taxes and availability of funds. If our interpretations or assumptions used in arriving at our reserve estimates prove to be inaccurate, the amount of oil and gas that will ultimately be recovered may differ materially from the estimated quantities and net present value of reserves owned by us.

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Actual future production, oil and natural gas prices, revenues, taxes, development expenditures, operating expenses and quantities of recoverable oil and gas reserves most likely will vary from estimates, perhaps significantly. In addition, we may adjust estimates of proved reserves to reflect production history, results of exploration and development, prevailing oil and natural gas prices and other factors, many of which are beyond our control.

If we are unable to fulfill commitments under any of our licenses, we will lose our interest, and our entire investment, in such license.

Our ability to retain licenses in which we obtain an interest will depend on our ability to fulfill the commitments made with respect to each license. We cannot assure you that we or the other participants in the projects will have the financial ability to fund these potential commitments. If we are unable to fulfill commitments under any of our licenses, we will lose our interest, and our entire investment, in such license.

We are subject to environmental regulations that can have a significant impact on our operations.

Our operations are subject to a variety of national, state, local, and international laws and regulations governing the discharge of materials into the environment or otherwise relating to environmental protection, particularly in the United Kingdom and Norway where our operations are currently concentrated. Failure to comply with these laws and regulations can result in the imposition of substantial fines and penalties as well as potential orders suspending or terminating our rights to operate. Some environmental laws to which we are subject provide for strict liability for pollution damages, rendering a person liable without regard to negligence or fault on the part of such person. In addition, we may be subject to claims alleging personal injury or property damage as a result of alleged exposure to hazardous substances such as oil and gas related products. Aquatic environments in which we operate are often particularly sensitive to environmental impacts, which may expose us to greater potential liability than that associated with exploration, development and production at many onshore locations.

Changes in environmental laws and regulations occur frequently, and any changes that result in more stringent or costly requirements for oil and gas exploration and production activities could require us, as well as others in our industry, to make significant expenditures to attain and maintain compliance which could have a corresponding material adverse effect on our competitive position, financial condition or results of operations. We cannot provide assurance that we will be able to comply with future laws and regulations to the same extent that we believe we have in the past. Similarly, we cannot always precisely predict the potential impact of environmental laws and regulations which may be adopted in the future, including whether any such laws or regulations would restrict our operations in any area.

Current and future environmental regulations, including restrictions on greenhouse gases due to concerns about climate change, could reduce the demand for our products. Our business, financial condition and results of operations could be materially and adversely affected if this were to occur.

Under certain environmental laws and regulations, we could be subject to liability arising out of the conduct of operations or conditions caused by others, or for activities that were in compliance with all applicable laws at the time they were performed. Such liabilities can be significant, and if imposed could have a material adverse effect on our financial condition or results of operations.

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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.

Oil and gas exploration, development and production are subject to various types of regulation by local, state and national agencies. Regulations and laws affecting the oil and gas industry are comprehensive and under constant review for amendment and expansion. These regulations and laws carry substantial penalties for failure to comply. The regulatory burden on the oil and gas industry increases our cost of doing business and, consequently, adversely affects our profitability. In addition, competitive conditions may be substantially affected by various forms of energy legislation and/or regulation considered from time to time by the governments and/or agencies thereof.

We are dependent on our executive officers and need to attract and retain additional qualified personnel.

Our future success depends in large part on the service of our executive officers. The loss of these executives could have a material adverse effect on our business. Although we have employment agreements with certain of our executive officers, there can be no assurance that we will have the ability to retain their services. Further, we do not maintain key-person life insurance on any executive officers.

Our future success also depends upon our ability to attract, assimilate and retain highly qualified technical and other management personnel, who are essential for the identification and development of our prospects. There can be no assurance that we will be able to attract, integrate and retain key personnel, and our failure to do so would have a material adverse effect on our business.

We are unable to predict the outcome of the pending SEC investigation.

In September 2005, we, our chief executive officer, the vice chairman of the board of directors and one of our directors, received subpoenas from the Philadelphia District office of the SEC in a matter captioned In the Matter of TriMedia Entertainment Group, Inc. requesting the provision of certain documents and information relating to us, TriMedia and a number of other companies and individuals. At one time, we had an investment in TriMedia. This interest was transferred as part of our restructuring that occurred in February 2004, described elsewhere in this Form 10-K. As part of the restructuring, our current management became affiliated with our company, and the company’s name was changed to Endeavour International Corporation. Endeavour intends to cooperate with the SEC in providing documents and information. The SEC advised us that its request was in connection with a confidential private investigation and that its request should not be construed as an indication that we or any other person or entity has violated any law. We have cooperated with the SEC and provided documents and information to the SEC. We believe that neither we nor any of our current officers or directors have engaged in any wrongful conduct and we do not anticipate that the SEC will make any allegations to that effect. We do not believe that the costs to be incurred by us in connection with the investigation will materially affect us. However, we are unable to predict the outcome of the investigation or whether it could have an impact on us or our operations.

Risks relating to our common stock

The trading price of our common stock may be volatile.

Smaller capitalized companies like ours often experience substantial fluctuations in the trading price of their securities. The trading price of our common stock has from time to time fluctuated significantly and in the future may be subject to similar fluctuations. The trading price may be affected by a number of

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factors, including those set forth herein, as well as our operating results, financial condition, announcements or drilling activities, general conditions in the oil and gas exploration and development industry, and other events or factors, some of which may be unrelated to our performance or prospects or to conditions in the industry as a whole.

There is a limited market for our common stock.

Our common stock is traded on the American Stock Exchange and the London Stock Exchange. Historically, there has not been an active trading market for a significant volume of our common stock. We are not certain that an active trading market for our common stock will develop, or if such a market develops, that it will be sustained, which may make it more difficult for you to sell your shares of common stock in the future.

If we, our existing stockholders or holders of our securities that are convertible into shares of our common stock sell additional shares of our common stock, the market price of our common stock could decline.

The market price of our common stock could decline as a result of sales of a large number of shares of common stock in the public market or the perception that such sales could occur. These sales, or the possibility that these sales may occur, might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

As of March 7, 2008, we had approximately 127.5 million shares of common stock outstanding. Of those shares, approximately 4.3 million shares are restricted shares subject to vesting periods of up to three years. The remainder of these shares are freely tradable.

In addition, approximately 5.9 million shares are issuable upon the exercise of presently outstanding stock options under our employee incentive plans, 1.3 million shares are issuable upon the exercise of presently outstanding options and warrants outside our employee incentive plans, 16.2 million shares are issuable upon the conversion of our convertible senior notes due 2012 and 50.0 million shares are issuable upon conversion of the Series C Preferred Stock, based upon the conversion price of $2.50, and 17.2 million shares are issuable upon conversion of the 11.5% convertible bonds issued January 2008, based on a conversion price of $2.36.

Provisions in our articles of incorporation, bylaws and the Nevada Revised Statutes may discourage a change of control.

Certain provisions of our amended and restated articles of incorporation and amended and restated bylaws and the Nevada Revised Statutes (“NRS”) could delay or make more difficult a change of control transaction or other business combination that may be beneficial to stockholders. These provisions include, but are not limited to, the ability of our board of directors to issue a series of preferred stock, classification of our board of directors into three classes and limiting the ability of our stockholders to call a special meeting.

We are subject to the “Combinations With Interested Stockholders Statute” and the “Control Share Acquisition Statute” of the NRS. The Combinations Statute provides that specified persons who, together with affiliates and associates, own, or within three years did own, 10% or more of the outstanding voting stock of a corporation cannot engage in specified business combinations with the corporation for a period of three years after the date on which the person became an interested stockholder, unless the combination

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or the transaction by which the person first became an interested stockholder is approved by the corporation’s board of directors before the person first became an interested stockholder.

The Control Share Acquisition Statute provides that persons who acquire a “controlling interest”, as defined, in a company may only be given full voting rights in their shares if such rights are conferred by the stockholders of the company at an annual or special meeting. However, any stockholder that does not vote in favor of granting such voting rights is entitled to demand that the company pay fair value for their shares, if the acquiring person has acquired at least a majority of all of the voting power of the company. As such, persons acquiring a controlling interest may not be able to vote their shares.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

Drilling Statistics

A well is considered productive for purposes of the following table if it justifies the installation of permanent equipment for the production of oil or gas. The information should not be considered indicative of future performance, nor should it be assumed that there is necessarily any correlation between the number of productive wells drilled, quantities of reserves found or economic value. The following table shows the results of the oil and gas wells in which we participated, drilled and tested during 2007, 2006 and 2005:

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	Productive Wells				Dry Holes				In Progress Wells
	Gross		Net		Gross		Net		Gross		Net
Exploration
2007:
United Kingdom		2		0.50		3		0.75		—		—
Norway		2		0.05		1		0.04		—		—
2006:
United Kingdom		2		0.38		1		0.10		—		—
2005:
United Kingdom		—		—		4		1.5		—		—
Development
2007:
United Kingdom		1		0.02		—		—		—		—
Norway		3		0.13		1		0.04		—		—
2006:
Norway		2		0.05		—		—		1		0.04
2005:
Norway		2		0.07		1		0.03		1		0.03

We do not own any drilling rigs, and all of our drilling activities are conducted by independent drilling contractors.

Productive Well Summary

At December 31, 2007, our productive wells included the following:

	Oil				Gas
	Gross		Net		Gross		Net
United Kingdom		42		2.67		5		0.35
Norway		38		1.04		—		—
Total		80		3.71		5		0.35

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Acreage

The following table sets forth certain information regarding our developed and undeveloped acreage as of December 31, 2007 in the areas indicated.

	Developed				Undeveloped
	Gross		Net		Gross		Net
United Kingdom		95,209		13,765		828,587		298,969
Norway		80,665		2,700		804,686		295,923
Ireland		—		—		172,797		34,559
Total		175,874		16,465		1,806,070		629,451

As of December 31, 2007, we had approximately 189,000, 199,000 and no net acres that are scheduled to expire by December 31, 2008, 2009 and 2010, respectively, if we take no action to continue the term through operational or administrative actions. We currently have plans to continue the terms of various licenses through operational or administrative actions and do not expect a significant portion of our net acreage position to expire before such actions occur.

Subsequent to December 31, 2007 we were awarded two production licenses in Norway with total gross acreage of 538,000 acres.

Sales Volumes and Prices

Information regarding our annual average sales volumes, sales prices and average production costs is contained in Item 7 of this Form 10-K. Additional detail of production costs is contained in the Supplemental Information under Item 8 of this Form 10-K.

Reserves

Our estimates of proved reserves, proved developed reserves and proved undeveloped reserves at December 31, 2007, 2006 and 2005 and changes in proved reserves during the last three years are contained in the Supplemental Information under Item 8 of this Form 10-K.

Item 3. Legal Proceedings

None.

Item 4. Submission of Matters to a Vote of Security Holders

None.

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Part II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock currently trades on the American Stock Exchange under the symbol “END” and on the London Stock Exchange under the symbol “ENDV”. The following table sets forth the range of high and low prices per share of our common stock for each of the calendar quarters identified below as reported by the American Stock Exchange. These quotations represent inter-dealer prices, without retail mark-up, markdown or commission, and may not represent actual transactions.

	2007				2006
	High		Low		High		Low
First Quarter	$	2.37	$	1.97	$	3.79	$	2.75
Second Quarter		2.25		1.33		3.80		2.10
Third Quarter		1.53		0.95		3.19		2.28
Fourth Quarter		1.45		1.05		2.68		2.01

Holders

As of March 7, 2008, the number of holders of record of our common stock was 177. We believe that there are a number of additional beneficial owners of our common stock who hold such shares in street name.

Dividends

We have not paid any cash dividends on our common stock to date, and have no intention of declaring or paying any cash dividends on our common stock in the foreseeable future. Our Series B Preferred Stock is subject to a cumulative 8% dividend. Unless the full amount of the foregoing dividends is paid in full, we cannot declare or pay any dividend on our common stock. The declaration and payment of dividends is subject to the discretion of our Board of Directors and to certain limitations imposed under Nevada corporate laws. The timing, amount and form of dividends, if any, will depend on, among other things, our results of operations, financial condition, cash requirements and other factors deemed relevant by our Board of Directors.

In November 2006, we issued the Series A Convertible Preferred Stock which was converted into the Series C Convertible Preferred Stock in December 2006. Dividends on the Series C Convertible Preferred Stock are payable in cash, or common stock if we are unable to pay such dividends in cash, and any dividends will be paid to the preferred stock investors prior to payment of any other dividend on any other shares of our capital stock. We will pay a cumulative dividend on the Series C Convertible Preferred Stock equal to 8.5% per annum of the original issue price (compounded quarterly) if paid in cash and 8.92% per annum of the original issue price (compounded quarterly) if paid in stock (the “Original Dividend Rate”). The Series C Convertible Preferred Stock also participates on an as-converted basis with respect to any dividends paid on the common stock. We paid the Series C Convertible

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Preferred Stock dividends in common stock until the dividends paid for the fourth quarter of 2007 which were paid in cash.

Issuance of dividends in the form of common stock are subject to the following equity conditions (the “Equity Conditions”), which are waivable by two-thirds of the holders of the Series C Convertible Preferred Stock: (i) such common stock is listed on the American Stock Exchange, the New York Stock Exchange or the Nasdaq Stock Market, and not subject to any trading suspension; (ii) we are not then subject to any bankruptcy event; and (iii) such common stock will be immediately re-saleable by the preferred stock investors pursuant to an effective registration statement and otherwise in compliance with all applicable laws. If we have not maintained the effectiveness of the registration statement, then the dividend rate on the Series C Convertible Preferred Stock will be increased by the product of 2.5% (if the dividend is paid in cash) or 2.63% (if the dividend is paid in stock) times the number of quarters (or portions thereof) in which the failure occurs or we fail to cure such failure.

Item 6. Selected Financial Data

The following table sets forth some of our historical consolidated financial data. The following data should be read in conjunction with “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Consolidated Financial Statements and Notes thereto included elsewhere herein. The selected consolidated financial data provided below are not necessarily indicative of our future results of operations or financial performance.

Selected Financial Data (1)
(Amounts in thousands, except per share data)	Year Ended December 31,
	2007			2006			2005			2004			2003
Revenues	$	176,064		$	54,131		$	38,656		$	3,663		$	27
Operating Profit (Loss)		38,292			(4,374	)		(28,089	)		(15,492	)		(31,922	)
Net Loss to Common Shareholders		(60,315	)		(8,829	)		(31,531	)		(23,372	)		(36,829	)
Net Loss Per Common Share – Basic and Diluted		(0.49	)		(0.10	)		(0.42	)		(0.37	)		(1.18	)
Summary Balance Sheet Data:
Working Capital		37,198			47,431			49,638			4,699			(6,051	)
Total Assets		747,623			774,470			186,966			101,737			12,582
Debt		266,250			306,250			81,250			2,150			—
Convertible Preferred Stock		125,000			125,000			—			—			—
Equity		70,149			116,828			40,344			56,972			3,181

⁽¹⁾ Includes the following:

• acquisition of Talisman Expro Limited in November 2006;

• acquisition of working interests in the Enoch and Bacchus prospects in 2006;

• disposition of Thailand assets in 2005;

• acquisition of Norwegian assets in November 2004 and January 2005;

• disposition of all U.S. assets in 2004;

• acquisition of NSNV, Inc. in 2004;

• acquisition of various U.S. assets in 2003; and

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• unrealized gains (losses) on commodity derivatives of $(89.1) million and $34.5 million in 2007 and 2006, respectively.

Information regarding each of these transactions is included in the notes to the Consolidated Financial Statements.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other parts of this report contain forward-looking statements that involve risks and uncertainties. All forward-looking statements included in this report are based on information available to Endeavour on the date hereof, and we assume no obligation to update any such forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth in the section captioned “Risk Factors” in Item 1A and elsewhere in this report. The following should be read in conjunction with the audited financial statements and the notes thereto included elsewhere herein. The following discussion also includes non-GAAP financial measures, which may not be comparable to similarly titled measures presented by other companies. Accordingly, we strongly encourage investors to review our financial statements in their entirety and not rely on any single financial measure.

Overview

We are an international oil and gas exploration and production company focused in the North Sea. To date, we have invested a significant amount of our resources on various development, acquisition and exploration projects. Over the last several years, we have used three acquisitions to build our base of production, proved reserves and cash flow – Norwegian assets in late 2004 and an interest in the Enoch field and eight fields in the UK from Talisman in 2006. With the completion of these acquisitions, we had a large base of production and cash flow at the end of 2006 that provided our first opportunity to operate producing assets. Initial production from the Enoch field in mid 2007 further added to our production and cash flows from the UK. The significant trends in the financials represent the impacts and timing of these acquisitions and the related financing, tax and derivative impacts.

While we have grown through acquisitions, we have also maintained a focus on exploration and development programs. 2005 saw the start of our exploration drilling program. Each year we have participated in the licensing round process in the UK and Norway and pursued farm-in opportunities in order to build our exploration portfolio. The success of the Columbus and Cygnus exploration activities in 2006 and the purchase of Enoch allowed us to move into development activities in late 2006. We initiated appraisal drilling at the Columbus prospect in 2007 that proved successful and completed development activities at the Enoch field to allow the commencement of production in mid 2007.

Key items in our drilling and operations in the last three years:

• Exploration – During the last three years, we’ve drilled fifteen exploration wells with four successes in the UK and two in Norway, including:

o Cygnus – The first of our wells in our 2006 drilling program, the Cygnus prospect, was spud in early February 2006 in the UK sector of the North Sea. The well has successfully tested as a gas discovery and is located within close proximity to several potential

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transportation routes. We continue to work toward completing the development plan with the other interest owners in the prospect.

o

Columbus – In 2006, we drilled the Columbus exploratory prospect in the Central Graben region of the North Sea. We served as operator of the well. In December 2006, we completed successful testing of the well. In 2007, we drilled an appraisal well and its sidetrack effectively confirming the presence of gas/condensate bearing sands. The well is now suspended for possible use in the development of the field. Information obtained from the drilling will be used to further advance development studies, an optimum reservoir depletion scheme and export plans to nearby infrastructure.

• Enoch – We completed the development program and began initial production in mid 2007.

• Producing assets – At the end of 2007, we completed a project designed to begin gas production at the Njord field. Production from Goldeneye has continued at levels in above our expectations, indicating the quality of this large gas field. Development drilling has been ongoing at Njord, Brage and Alba to maintain production levels.

Results of Operations

Cash flow provided by (used in) operations was $128.5 million in 2007 versus $(14.1) million in 2006 and $28.0 million in 2005. Discretionary cash flow was $113.0 million in 2007 compared to $10.7 million and $6.3 million in 2006 and 2005, respectively. This significant increase in discretionary cash flow allowed us to repay $40 million in debt while spending $88 million in capital expenditures 2007.

Net loss for 2007 was $60.3 million, or $0.49 per share, reflecting the significant unrealized loss on the mark-to-market of commodity derivatives. For 2006 and 2005, net loss was $8.8 million and $31.5 million, respectively, or $0.10 per share and $0.42 per share, respectively. The net loss for 2006 reflects a significant unrealized gain on the mark-to-market of commodity derivatives. Net loss as adjusted for 2007 would have been $10.9 million or $0.09 per share without the effect of derivative transactions and currency impacts of deferred taxes as compared to net loss as adjusted of $21.3 million or $0.25 per share in 2006 and net loss as adjusted of $33.4 million or $0.45 per share in 2005. Adjusted EBITDA increased to $124.1 million in 2007 from $9.2 million and $8.1 million in 2006 and 2005, respectively.

In connection with the Talisman Acquisition, we entered into various oil and gas derivative instruments to stabilize cash flows from the acquired assets and satisfy certain obligations under the financing agreements that funded the acquisition. Hedge accounting has not been elected for these instruments resulting in the application of mark-to-market accounting — effectively pulling forward into current periods the non-cash gains and losses from commodity price fluctuations relating to all future delivery periods. When we entered into these contracts, they covered nearly 5.2 million BOE beginning in 2007 and running through 2011 at a weighted average price of $68.35. As both oil and gas prices fell from the date we entered into the contracts through December 31, 2006, we recorded an unrealized gain of $34.5 million reflecting the decline in future commodity prices through 2011. However, in 2007, commodity price changes reversed their 2006 declines, continuing to increase to record levels in the case of oil. With oil prices reaching nearly $100 per barrel and gas prices recovering to levels close to our original contract prices, we recorded an $89.1 million unrealized loss in 2007 on contract volumes through 2011. In 2007, we did receive $12.0 million in cash on the settlement of instruments that closed during 2007. We will continue to have fluctuations in net earnings each period as commodity prices fluctuate based on all remaining unsettled contracts at the end of each period. See Note 7 to the consolidated financial statements for additional information on these derivatives.

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Revenues, Production and Operating Costs

Revenues increased from 2005 to 2006 and again to 2007 due to higher market prices and the significant impact of our acquisitions discussed above. For 2007, 2006 and 2005, we had production of approximately 9,000 BOE per day, 2,800 BOE per day and 2,100 BOE per day, respectively. Our revenues are sensitive to changes in prices received for our products. Our production is sold at prevailing market prices which fluctuate in response to many factors that are outside of our control. Given the current tightly balanced supply-demand market, small variations in either supply or demand, or both, can have dramatic effects on prices we receive for our oil and natural gas production. While the market price received for oil and natural gas varies among geographic areas, oil trades in a worldwide market, whereas natural gas, which has a limited global transportation system, is subject to local supply and demand conditions. Consequently, price movements for all types and grades of crude oil generally move in the same direction. Natural gas prices in the North Sea have been influenced by fuel prices around the world with crude oil and coal reaching all time highs. These prices are also impacted by European gas supplies, particularly deliveries from Russian gas supplies. In addition, regional supply and demand issues affect gas prices. The majority of our natural gas is sold in the UK market. Market prices for both oil and natural gas were at historically high levels during 2006 and oil prices continued their high levels throughout much of 2007. North Sea gas prices declined in the first quarter of 2007 but recovered in the second half of the year and have remained strong.

Total operating costs increased from 2005 through 2007 as a result of the acquisitions discussed above. Operating costs per BOE declined for 2006 and 2007 due to the lower operating costs per BOE for our acquired UK properties.

The following table shows our annual average sales volumes, sales prices and average production costs.

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	Year Ended December 31,
	2007			2006			2005
Production (1):
Oil and condensate sales (Mbbl):
United Kingdom		1,274			209			—
Norway		519			508			726
Total		1,793			717			726
Gas sales (MMcf):
United Kingdom		8,556			1,539			—
Norway		328			203			184
Total		8,884			1,742			184
Total sales (MBOE)
United Kingdom		2,700			466			—
Norway		574			542			756
Total		3,274			1,008			756
BOE per day		8,969			2,760			2,072
Realized Prices (2):
Oil and condensate price ($  per Bbl)
Before commodity derivatives	$	67.11		$	60.51		$	54.92
Effect of commodity derivatives		(2.13	)		(7.63	)		(3.18	)
Realized prices including commodity derivatives	$	64.98		$	52.88		$	51.74
Gas price ($  per Mcf)
Before commodity derivatives	$	6.27		$	9.30		$	6.06
Effect of commodity derivatives		1.79			—			—
Realized prices including commodity derivatives	$	8.06		$	9.30		$	6.06
Equivalent oil price ($  per BOE)
Before commodity derivatives	$	53.78		$	59.15		$	54.17
Effect of commodity derivatives		3.68			(5.43	)		(3.05	)
Realized prices including commodity derivatives	$	57.46		$	53.72		$	51.12
Operating Statistics:
Operating costs ($  per BOE) (3)	$	12.56		$	15.45		$	15.86
G&A costs ($  per BOE)	$	6.07		$	21.76		$	24.10
Production per employee (MBOE per employee)		54			17			15

(1)	We record oil revenues on the sales method, i.e. when delivery has occurred. Actual production may differ based on the timing of tanker liftings. We use the entitlements method to account for sales of gas production. Our physical daily production was approximately 9,300 BOE, 2,900 BOE and 2,000 BOE for 2007, 2006 and 2005, respectively.
(2)	The average sales prices include gains and losses for derivative contracts we utilize to manage price risk related to our future cash flows.

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⁽³⁾ Operating costs are costs incurred to operate and maintain our wells and related equipment and include cost of labor, well service and repair, location maintenance, power and fuel, transportation, cost of product and production related general and administrative costs.

DD&A and Impairment of Oil and Gas Properties

DD&A expense increased through each successive year as a result of the acquisitions discussed above. In addition, DD&A for 2006 includes $1.2 million related to the impairment of our intangible asset. During 2006 and 2005, we recorded $0.8 million and $27.1 million, respectively, in impairment of oil and gas properties related to four exploratory wells.

General and Administrative Expenses

With our expanded operations, we had 61 employees at December 31, 2007, 58 employees at December 31, 2006 and 51 employees at December 31, 2005. G&A expenses decreased to $19.9 million during 2007 as compared to $21.9 million for 2006. These decreases resulted from changes in non-cash stock-based compensation as a result of the final vesting of inducement grants given in 2004 upon the formation of Endeavour and current year forfeitures. The decreases were partially offset by increased compensation expense, accounting, legal and tax consulting fees and occupancy costs. The compensation expense increase reflects additional payroll taxes and salary expense related to increases in staffing. Occupancy costs increased due to additional office space related to in four locations, while property acquisitions furthered the increase in accounting, legal and tax consulting fees. G&A expenses increased to $21.9 million during 2006 as compared to $18.2 million in 2005 primarily due to increases in compensation expenses as staffing increased, partially offset by related increases in capitalized employee costs. Our G&A expenses per MBOE have continued to decline as we have been able to absorb the various acquisition assets without a corresponding increase in the number of employees. Components of G&A expenses for these periods are as follows:

(Amounts in thousands, except per BOE data)	Year Ended December 31,
	2007			2006			2005
Compensation	$	14,407		$	13,027		$	9,742
Consulting, legal and accounting fees		6,440			4,989			5,235
Occupancy costs		1,364			845			1,070
Other expenses		1,321			2,342			2,273
Total gross cash G&A expenses		23,532			21,203			18,320
Non-cash stock-based compensation		4,968			11,573			7,908
Fair market value adjustment of stock options – non-cash		—			—			(555	)
Total gross non-cash G&A expenses		4,968			11,573			7,353
Gross G&A expenses		28,500			32,776			25,673
Less: capitalized G&A expenses		(8,622	)		(10,852	)		(7,450	)
Net G&A expenses	$	19,878		$	21,924		$	18,223

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Interest Expense and Other

Interest expense increased to $18.7 million in 2007, reflecting the full year of the various debt instruments issued to fund the Talisman Acquisition. Interest expense increased to $7.9 million for 2006 versus only $4.3 million in 2005 due to the issuance of the borrowing base facility and the second lien term loan in late 2006. Interest income results from our investments of excess cash in short-term commercial paper and money market accounts. Interest income during 2005 is primarily due to receipt of funds from the issuance of our 6% convertible debt in early 2005.

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.

During 2005, we recorded $5.3 million in litigation expense to reflect the settlement of litigation brought by GHK Company, LLC and other plaintiffs. The lawsuit was settled subsequent to year-end by the issuance of 1.5 million shares of our common stock.

Other income (expense) for 2006 includes $3.8 million in financing costs paid in connection with the Talisman Acquisition and $1.8 million impairment of long-term marketable securities with the remainder primarily representing foreign currency exchange losses. Other income (expense) for 2005 was primarily foreign currency exchange gains.

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Income Taxes

The following summarizes the components of tax expense (benefit):

							The
(Amounts in thousands)	UK			Norway			Netherlands			U.S.			Total
Year Ended December 31, 2007
Net income (loss) before taxes	$	(68,704	)	$	10,727		$	6,584		$	(6,864	)	$	(58,257	)
Current tax expense (benefit)		2,898			562			289			(3	)		3,746
Deferred tax expense (benefit)		(27,430	)		8,951			711			—			(17,768	)
Foreign currency losses on deferred tax liabilities		1,328			3,514			—			—			4,842
Total tax expense (benefit)		(23,204	)		13,027			1,000			(3	)		(9,180	)
Net income (loss) after taxes	$	(45,500	)	$	(2,300	)	$	5,584		$	(6,861	)	$	(49,077	)
Year Ended December 31, 2006
Net income (loss) before taxes	$	33,275		$	4,375		$	13		$	(20,588	)	$	17,075
Current tax expense		1,837			9,014			69			(45	)		10,875
Deferred tax expense		10,105			(1,840	)		—			—			8,265
Foreign currency losses on deferred tax liabilities		2,904			1,869			—			—			4,773
Total tax expense		14,846			9,043			69			(45	)		23,913
Net income (loss) after taxes	$	18,429		$	(4,668	)	$	(56	)	$	(20,543	)	$	(6,838	)
Year Ended December 31, 2005
Net income (loss) before taxes	$	(31,396	)	$	14,057		$	(17	)	$	(2,956	)	$	(20,312	)
Current tax expense		—			7,770			—			48			7,818
Deferred tax expense		—			5,067			—			—			5,067
Foreign currency losses on deferred tax liabilities		—			(1,824	)		—			—			(1,824	)
Total tax expense		—			11,013			—			48			11,061
Net income (loss) after taxes	$	(31,396	)	$	3,044		$	(17	)	$	(3,004	)	$	(31,373	)

After the closing of our acquisition of the Enoch field and the Talisman Acquisition in the UK in 2006, our income tax expense relates primarily to operations in the UK and Norway. During 2007, we incurred taxes in all of the jurisdictions in which we do business, except for the United States (U.S.), whereas in 2006, we incurred taxes only on our Norwegian operations. After closing the Talisman Acquisition, we began recording tax expense (benefit) for our UK operations and removed the valuation allowances previously recorded. The change in income taxes from an expense of $11.1 million to an expense of $23.9 million for 2005 and 2006, respectively, is primarily the result of the establishment of a tax paying position in the UK upon closing the acquisitions and the effect of foreign currency changes on the deferred tax liabilities. The change in income taxes from an expense of $23.9 million in 2006 to a benefit of $9.2 million in 2007 resulted from the impact of the mark–to– market changes on our derivatives and the activity of our UK operations. At December 31, 2007, we had net operating loss carryforwards of $48 million in the U.S. and $46 million corporate tax net operating loss carryforwards and $29 million special corporate tax net operating loss carryforwards in the U.K.

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In 2007, 2006 and 2005, we have not recorded any income tax benefits in the U.S. as there was no assurance that we could generate any U.S. taxable earnings, resulting in a full valuation allowance of deferred tax assets generated. In addition, we have not recorded any income tax benefits in the UK or The Netherlands during 2005 as there was no assurance that we could generate any taxable earnings, resulting in full valuation allowances.

As our deferred tax liabilities in the UK, the Netherlands and Norway are denominated in their respective currencies, we revalue those deferred tax liabilities to the applicable foreign currency exchange rate at the end of each period. Those foreign currency gains and losses are included in income tax expense.

Liquidity and Capital Resources

(Amounts in thousands)	December 31, 2007			December 31, 2006
Cash	$	16,440		$	39,814
Restricted cash		22,000			1,867
Long-term debt		(266,250	)		(303,840	)
Debt, net of cash	$	(227,810	)	$	(262,159	)

	Year Ended December 31,
(Amounts in thousands)	2007			2006			2005
Net cash provided by (used in):
Operating activities	$	128,506		$	(14,100	)	$	27,962
Investing activities	$	(108,140	)	$	(427,118	)	$	(34,972	)
Financing activities	$	(43,740	)	$	403,369		$	75,411

We have historically funded our operations and acquisitions through issuances of debt and equity securities. Significant issuances and repayments of debt and equity, as well as the uses of the proceeds, in 2007, 2006 and 2005 were as follows:

• repaid net $40 million of our senior debt facility

• in the fourth quarter of 2006 in conjunction with the Talisman Acquisition, we issued

• 37.8 million shares of common stock for $89 million in gross proceeds,

• 125,000 shares of Series C Convertible Preferred Stock for $125 million in gross proceeds,

• $150 million in a borrowing base debt facility, before financing costs of $3.2 million, and

• $75 million in a second lien term loan, before financing costs of $2.6 million, to acquire producing properties in the UK;

• in May 2006, we completed the $11.6 million purchase for cash of an eight percent interest in the Enoch field;

• in the first quarter of 2005, we completed the issuance of $81.25 million in senior convertible notes due 2012; and

• 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 2.2 million shares of our common stock.

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As previously discussed, we also sold our partnership interests in Thailand to a private entity for net proceeds of approximately $19 million in 2005.

See Note 10 to the Consolidated Financial Statements for additional discussion of our debt.

The increased revenues generated by a full year of operations of our acquired assets were primarily responsible for the cash flows provided by operations of $128.5 million for 2007 versus the $14.1 million used by operations in 2006. Cash flows used by operating activities were $14.1 million for 2006 as compared to cash flows provided by operating activities of $28.0 million for 2005 primarily due to higher interest expense in 2006 as discussed above and the changes in assets and liabilities between the two periods, partially offset by the higher revenues from the assets acquired in the Talisman Acquisition.

Non-GAAP Measures

Net income can be significantly affected by various non-cash items, such as unrealized gains and losses on our commodity derivatives, currency impact of long-term liabilities and deferred taxes. Given the significant impact that non-cash items may have on our net income, we use various measures in addition to net income, including non-financial performance indicators and non-GAAP measures as key metrics to manage our business. These key metrics demonstrate the company’s ability to maintain or grow production levels and reserves, internally fund capital expenditures and service debt as well as provide comparisons to other oil and gas exploration and production companies. These measures include, among others, debt and cash balances, production levels, oil and gas reserves, drilling results, discretionary cash flow, adjusted earnings before interest, taxes, depreciation, depletion and amortization (“Adjusted EBITDA”) and adjusted net income.

Net Income (Loss) as Adjusted, Adjusted EBITDA and Discretionary Cash Flow are internal, supplemental measures of our performance that are not required by, or presented in accordance with, generally accepted accounting principles (GAAP). We use these non-GAAP measures as internal measures of performance and to aid in our budgeting and forecasting processes. We view these non-GAAP measures, and we believe that others in the oil and gas industry view these, or similar, non-GAAP measures, as commonly used analytic indicators to compare performance among companies. We further believe that these non-GAAP measures are frequently used by securities analysts, investors, and other interested parties in the evaluation of issuers, many of which present these measures when reporting their results. We believe these non-GAAP measures provide useful information to both management and investors to gain an overall understanding of our current financial performance and provide investors with financial measures that most closely align to our internal measurement processes. Since the application of mark-to-market accounting has the effect of pulling forward into current periods non-cash gains and losses related to commodity derivatives relating to future delivery periods, analysis of results of operations from one period to another can be difficult. We believe that excluding these unrealized non-cash gains and losses related to commodity derivatives and currency exchange changes provides a more meaningful representation of our economic performance in the reporting period and is therefore useful to us, investors, analysts and others in facilitating the analysis of our results of operations from one period to another. These measures should not be considered as measures of financial performance under GAAP, and the items excluded from these measures are significant components in understanding and assessing financial performance.

These non-GAAP measures should not be considered in isolation or as an alternative to net income, operating income, or any other performance measures derived in accordance with GAAP or as alternatives to cash flows generated by operating, investing or financing activities as a measure of our liquidity. Because Net Income (Loss) as Adjusted, Adjusted EBITDA and Discretionary Cash Flow are

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not measurements determined in accordance with GAAP and thus susceptible to varying calculations, Net Income (Loss) as Adjusted, Adjusted EBITDA and Discretionary Cash Flow as presented may not be comparable to other similarly titled measures of other companies.

Net Income (Loss) as Adjusted, Adjusted EBITDA and Discretionary Cash Flow have limitations as an analytical tool, and you should not consider these measures in isolation, or as a substitute for analysis of our financial statement data presented in the consolidated financial statements as reported under GAAP. For example, Net Income (Loss) as Adjusted, Adjusted EBITDA and Discretionary Cash Flow may not reflect:

• our cash expenditures, or future requirements, for capital expenditures or contractual commitments;

• changes in, or cash requirements for, our working capital needs;

• unrealized gains (losses) on derivatives;

• non-cash foreign currency gains (losses);

• our interest expense, or the cash requirements necessary to service interest and principal payments on our debts;

• our preferred stock dividend requirements; and

• depreciation, depletion and amortization.

Because of these limitations, Net Income (Loss) as Adjusted, Adjusted EBITDA and Discretionary Cash Flow should not be considered as measures of cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and by using Net Income (Loss) as Adjusted, Adjusted EBITDA and Discretionary Cash Flow only supplementally.

As required under Regulation G of the Securities Exchange Act of 1934, provided below are reconciliations of net income (loss) to the following non-GAAP financial measures: net income as adjusted, Adjusted EBITDA and discretionary cash flow.

(in thousands, except per share)	December 31,
	2007			2006			2005
Net loss	$	(49,077	)	$	(6,838	)	$	(31,373	)
Depreciation, depletion and amortization		76,850			20,164			9,337
Impairment of oil and gas properties		—			849			27,116
Deferred tax expense (benefit)		(12,926	)		13,038			3,243
Unrealized (gain) loss on derivative instruments		89,132			(34,531	)		—
Amortization of non-cash compensation		4,968			11,573			7,070
Gain on sale of oil and gas assets		—			—			(14,966	)
Other		4,026			6,408			(9,134	)
Discretionary cash flow	$	112,973		$	10,663		$	8,707

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(in thousands, except per share)	December 31,
	2007			2006			2005
Net income (loss) to common shareholders, as reported	$	(60,315	)	$	(8,829	)	$	(31,531	)
Unrealized (gains) losses on derivatives (net of 50% tax)		44,566			(17,266	)		—
Currency impact of deferred taxes		4,842			4,773			(1,824	)
Net income (loss) as adjusted	$	(10,907	)	$	(21,322	)	$	(33,355	)
Weighted average number of common shares outstanding – basic and diluted		123,118			86,636			74,433
Earnings per share, as adjusted	$	(0.09	)	$	(0.25	)	$	(0.45	)
Net income (loss) to common shareholders, as reported	$	(60,315	)	$	(8,829	)	$	(31,531	)
Unrealized (gains) losses on derivatives		89,132			(34,531	)		—
Net interest expense		16,430			5,676			1,717
Depreciation, depletion and amortization		76,850			20,164			9,337
Impairment of oil and gas properties		—			849			27,116
Income tax expense (benefit)		(9,180	)		23,913			11,061
Litigation settlement expense		—			—			5,265
Gain on sale of oil and gas assets		—			—			(14,966	)
Preferred stock dividends		11,238			1,991			158
Adjusted EBITDA	$	124,155		$	9,233		$	8,157

Discretionary cash flow is equal to cash flow from operating activities before the changes in operating assets and liabilities.

Outlook

Drilling Program

We anticipate spending approximately $90 million during 2008 to fund oil and gas exploration and development in the North Sea. An estimated $40 million will be allocated to drilling at least five exploration prospects in the North Sea. Approximately 60 percent of this exploration budget will be spent in Norway with the balance dedicated to drilling in the UK. In Norway, we expect to drill our first well as an operator with the Jade prospect on PL270 slated to begin drilling during the fourth quarter of 2008. The area is the site of the two Agat natural gas discoveries and the test will set out to identify additional reserves in support of commercial development. Most of the remaining exploratory wells are outside operated.

Some $20 million is expected to be spent for development drilling and facilities improvements to maintain maximum production levels. Another $30 million will fund our efforts in the UK to move the Cygnus and Columbus discoveries toward field development plans and for further exploitation of undeveloped reserves in the Renee field on Block 15/27.

The timing and order of this program will be determined by the completion of ongoing technical work, partner approvals and rig scheduling for individual prospects. We may increase or decrease our planned activities for 2008 or high grade our exploratory prospects, depending upon drilling results, potential

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acquisition candidates, product prices, the availability of capital resources and other factors affecting the economic viability of such activities. We believe we have a production base that generates significant cash flow to fund our future growth plans and ongoing operations.

Rig Commitments

During 2006, we entered into a rig commitment for 220 days for the United Kingdom sector of the North Sea. The value of this contact is approximately $66 million. The arrangement is with Applied Drilling Technology International, a division of GlobalSantaFe. During 2007, we utilized 73 days of this rig commitment to drill the Balgownie and Emu prospects. We expect to utilize the remaining 147 days of this commitment beginning in the third quarter of 2008 through 2009 depending on well scheduling.

We have a consortium with several other operators in the Norwegian Continental Shelf that has entered into a contract for the use of a drilling rig over a multi-year period. The contract commits us to 100 days (for two wells) of drilling services for approximately $38 million between mid 2008 and 2009.

Revenues and Production

We expect production for 2008 to range from 8,600 to 9,000 BOE per day, with approximately 50 – 55% of that production as gas. For 2008, we expect realized prices before derivatives to be $0.30 - $0.40 per Mcf less than the National Balance Point price for gas and $4.00 — $5.00 per Bbl less than the Dated Brent price for oil.

Oil prices continued to be impacted by supply and demand on a worldwide basis, while natural gas prices are more impacted by regional economic and weather patterns. Oil prices have continued to increase since year-end and natural gas prices in the UK, the market for the majority of our gas production, have recovered significantly due primarily to return to normal weather conditions. In connection with the Talisman Acquisition, we entered into commodity derivative instruments to secure our realized prices for a portion of our oil and gas production through 2011. See Note 7 to the Consolidated Financial Statements herein for more discussion of our commodity derivative instruments.

We expect operating costs per BOE to be in the range of $14 to $15 per BOE for 2008. Commodity prices can also affect our operating cash flow through an indirect effect on operating expenses. Significant commodity price increases, as experienced in recent years, can lead to an increase in drilling and development activities. As a result, the demand and cost for people, services, equipment and materials may also increase, causing a negative impact on our cash flow.

Liquidity and Financial Resources

As previously discussed, we completed the acquisition of producing properties in the UK in late 2006, financed through the issuance of common stock, convertible preferred stock and debt. This acquisition significantly increased the size of our production and reserves upon closing and should also provide cash flow to support our ongoing exploration drilling program for the next several years. Annual dividends on the convertible preferred stock are expected to be $11 million, assuming we pay the dividends in cash. The newly issued debt bears interest at LIBOR plus an applicable margin. In 2007, we entered into an interest rate swap for a notional amount of $37.5 million whereby we pay a fixed rate of 5.05% and receive LIBOR.

In January 2008, we completed the refinancing of certain debt utilizing a strategic investment by the Smedvig Family Office in Norway. Included in this refinancing were: the repayment of our Second Lien

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Term Loan, plus accrued interest; issuance of $40 million under a private offering of 11.5% guaranteed convertible bonds due 2014; and borrowing of $25 million under a Junior Credit Facility, which will bear interest at the sum of LIBOR, 3.5% (5.5% after the first year). Amounts borrowed under the Junior Facility will be repaid in semi-annual payments beginning December 31, 2009 and must be repaid in full on October 11, 2011. The Junior Facility may be repaid at our option without any penalty. The Smedvig Family also committed an additional $60 million for future investments with us. We expect to have interest expense, including the effect of these new debt agreements, of approximately $17 million annually while paying only $12 million in cash interest.

Our income tax expense relates primarily to our operations in the UK (statutory income tax rate of 50%) and to our operations in Norway (statutory income tax rate of 78%). We are currently not able to record income tax benefits on our U.S. loss as there is no assurance that we can generate any U.S. taxable earnings. Further, we are only able to record an income tax benefit on interest expense related to approximately $200 million of our long term debt at an effective income tax rate of 30%. Due to our ongoing drilling program and utilization of deferred tax assets, we anticipate that the majority of tax expense, before foreign currency effects, will be deferred tax expense.

As part of the financing for the Talisman Acquisition during the fourth quarter of 2006, we entered into a $225 million senior bank facility, subject to a borrowing base limitation. The borrowing base is subject to redetermination every six months with an independent reserve report required every 12 months. At December 31, 2007, the borrowing base capacity was $146 million, of which $110 million was outstanding. The senior bank facility also provides for issuances of letters of credit of up to an aggregate $60 million. While all letters of credit issued under the senior bank facility will reduce the total amount available for drawing under the senior bank facility, letters of credit issued to secure abandonment liabilities in respect of borrowing base assets will not reduce the amount available under the borrowing base. As of December 31, 2007, we have $40.8 million of outstanding letters of credit related to abandonment liabilities on certain of our oil and gas properties.

Critical Accounting Policies and Estimates

The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and have been presented on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. These accounting principles require management to use estimates, judgments and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, and revenues and expenses during the reporting period. Management reviews its estimates, including those related to the determination of proved reserves, estimates of future dismantlement costs, income taxes and litigation. Actual results could differ from those estimates.

Management believes it is reasonably possible that the following material estimates affecting the financial statements could change in the coming year: (1) estimates of proved oil and gas reserves, (2) estimates as to the expected future cash flow from proved oil and gas properties, (3) estimates of future dismantlement and restoration costs, (4) estimates of fair values used in purchase accounting and (5) estimates of the fair value of derivative instruments. In addition, alternatives may exist among various accounting methods. In such cases, the choice of accounting method may also have a significant impact on reported amounts.

Our critical accounting policies are as follows:

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Full Cost Accounting

Under the full cost method, all acquisition, exploration and development costs, including certain directly related employee costs and a portion of interest expense, incurred for the purpose of finding oil and gas are capitalized and accumulated in pools on a country–by–country basis. Capitalized costs include the cost of drilling and equipping productive wells, including the estimated costs of dismantling and abandoning these assets, dry hole costs, lease acquisition costs, seismic and other geological and geophysical costs, delay rentals and costs related to such activities. Employee costs associated with production and other operating activities and general corporate activities are expensed in the period incurred.

Capitalized costs are limited on a country-by-country basis (the ceiling test). The ceiling test limitation is calculated as the sum of the present value of future net cash flows related to estimated production of proved reserves, using end-of-the-current-period prices including the effect of derivative instruments that qualify as cash flow hedges, discounted at 10%, plus the lower of cost or estimated fair value of unproved properties, all net of expected income tax effects. Under the ceiling test, if the capitalized cost of the full cost pool, net of deferred taxes, exceeds the ceiling limitation, the excess is charged as an impairment expense.

We utilize a single cost center for each country where we have operations for amortization purposes. Any conveyances of properties are treated as adjustments to the cost of oil and gas properties with no gain or loss recognized unless the operations are suspended in the entire cost center or the conveyance is significant in nature.

Unproved property costs include the costs associated with unevaluated properties and properties under development and are not included in the full cost amortization base (where proved reserves exist) until the project is evaluated. These costs include unproved leasehold acreage, seismic data, wells and production facilities in progress and wells pending determination, together with interest costs capitalized for these projects. Seismic data costs are associated with specific unevaluated properties where the seismic data is acquired for the purpose of evaluating acreage or trends covered by a leasehold interest owned by us. Significant unproved properties are assessed periodically for possible impairment or reduction in value. If a reduction in value has occurred, these property costs are considered impaired and are transferred to the related full cost pool. Geological and geophysical costs included in unproved properties are transferred to the full cost amortization base along with the associated leasehold costs on a specific project basis. Costs associated with wells in progress and wells pending determination are transferred to the amortization base once a determination is made whether or not proved reserves can be assigned to the property. Costs of dry holes are transferred to the amortization base immediately upon determination that the well is unsuccessful. Unproved properties whose acquisition costs are not individually significant are aggregated, the portion of such costs estimated to be ultimately nonproductive, based on experience, are amortized to the full cost pool over an average holding period.

In countries where the existence of proved reserves has not yet been determined, unevaluated property costs remain capitalized in unproved property cost centers until proved reserves have been established, exploration activities cease or impairment and reduction in value occurs. If exploration activities result in the establishment of a proved reserve base, amounts in the unproved property cost center are reclassified as proved properties and become subject to amortization and the application of the ceiling test. When it is determined that the value of unproved property costs have been permanently diminished (in part or in whole) based on the impairment evaluation and future exploration plans, the unproved property cost centers related to the area of interest are impaired, and accumulated costs charged against earnings.

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We capitalize interest on expenditures for significant exploration and development projects while activities are in progress to bring the assets to their intended use. Capitalized interest is calculated by multiplying our weighted-average interest rate on debt by the amount of qualifying costs and is limited to gross interest expense. As costs are transferred to the full cost pool, the associated capitalized interest is also transferred to the full cost pool.

Business Combinations

Accounting for the acquisition of a business requires the allocation of the purchase price to the various assets and liabilities of the acquired business and recording deferred taxes for any differences between the allocated values and tax basis of assets and liabilities. Any excess of the purchase price over the amounts assigned to assets and liabilities is recorded as goodwill. In connection with the several acquisitions, we recorded goodwill for the excess of the purchase price over the value assigned to individual assets acquired and liabilities assumed. Our fair value estimates for the acquisition are subject to change as additional information becomes available and is assessed.

Purchase Price Allocation

The purchase price allocation is accomplished by recording the asset or liability at its estimated fair value. We use all available information to make these fair value determinations, including information commonly considered by our engineers in valuing individual oil and gas properties and sales prices for similar assets. Estimated deferred taxes are based on available information concerning the tax basis of the acquired company’s assets and liabilities and carryforwards at the merger date, although such estimates may change in the future as additional information becomes known. The amount of goodwill recorded in any particular business combination can vary significantly depending upon the values attributed to assets acquired and liabilities assumed relative to the total acquisition cost.

Goodwill and Intangible Assets

Goodwill represents the excess of the purchase price over the estimated fair value of the assets acquired and liabilities assumed in an acquisition. Intangible assets represent the purchase price allocation to the assembled workforce as a result of the acquisition of NSNV, Inc. We assess the carrying amount of goodwill and other indefinite-lived intangible assets by testing the asset for impairment annually at year-end, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The impairment test requires allocating goodwill and all other assets and liabilities to reporting units. The fair value of each reporting unit is determined and compared to the book value of the reporting unit. An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value.

Dismantlement, Restoration and Environmental Costs

We recognize liabilities for asset retirement obligations associated with tangible long-lived assets, such as producing well sites, offshore production platforms, and natural gas processing plants, with a corresponding increase in the related long-lived asset. The asset retirement cost is depreciated along with the property and equipment in the full cost pool. The asset retirement obligation is recorded at fair value and accretion expense, recognized over the life of the property, increases the liability to its expected settlement value. If the fair value of the estimated asset retirement obligation changes, an adjustment is recorded for both the asset retirement obligation and the asset retirement cost.

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Revenue Recognition

We use the entitlements method to account for sales of gas production. We may receive more or less than our entitled share of production. Under the entitlements method, if we receive more than our entitled share of production, the imbalance is treated as a liability at the market price at the time the imbalance occurred. If we receive less than our entitled share, the imbalance is recorded as an asset at the lower of the current market price or the market price at the time the imbalance occurred. Oil revenues are recognized when production is sold to a purchaser at a fixed or determinable price, when delivery has occurred, title has transferred and collectibility of the revenue is probable.

Derivative Instruments and Hedging Activities

From time to time, we may utilize derivative financial instruments to hedge cash flows from operations or to hedge the fair value of financial instruments. We may use derivative financial instruments with respect to a portion of our oil and gas production or a portion of our variable rate debt to achieve a more predictable cash flow by reducing our exposure to price fluctuations. These transactions are likely to be swaps, collars or options and to be entered into with major financial institutions or commodities trading institutions. Derivative financial instruments are intended to reduce our exposure to declines in the market prices of commodities that we sell and increases in interest rates and to manage cash flows in support of our annual capital expenditure budget.

Regardless of whether the derivative instrument is accounted for as a hedge or not, derivative instruments (including certain derivative instruments embedded in other contracts) are recorded at fair market value and included in the balance sheets as assets or liabilities. The accounting for changes in the fair value of a derivative instrument that is not accounted for as a hedge is included in other (income) expense as an unrealized gain or loss. The accounting for changes in the fair value of a derivative instrument depends on the intended use of the derivative and the resulting designation, which is established at its inception. Where we intend to account for a derivative as a hedge, we document, at its inception, the hedging relationship, the risk management objective and the strategy for undertaking the hedge. The documentation includes the identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged, and the method that will be used to assess effectiveness of derivative instruments that receive hedge accounting treatment.

Derivative instruments designated as cash flow hedges are reflected at fair value in our Consolidated Balance Sheets. Changes in fair value, to the extent the hedge is effective, are recognized in other comprehensive income until the forecasted transaction occurs. Hedge effectiveness is assessed at least quarterly based on total changes in the derivative’s fair value. Any ineffective portion of the derivative instrument’s change in fair value is recognized immediately in other (income) expense.

Income Taxes

We use the liability method of accounting for income taxes under which deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities, and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as part of the provision for income taxes in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of, or all of, the deferred tax assets will not be realized.

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In July 2006, the Financial Accounting Standards Board issued a new interpretation that seeks to reduce the diversity in practice associated with certain aspects of measurement and recognition in accounting for income taxes. This new interpretation also provides guidance on classification, derecognition, interest, penalties and accounting in interim periods and also requires expanded disclosure with respect to the uncertainty in income taxes. The interpretation was effective for us as of January 1, 2007. Our adoption of this standard on January 1, 2007 did not have a material effect on our financial statements.

Stock-Based Compensation Arrangements

In December 2004, the Financial Accounting Standards Board (“FASB”) revised rules that require all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. We adopted these new rules effective January 1, 2006 using the modified prospective method in which the prior period financial statements are not restated. The share-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the employee’s requisite service period (generally the vesting period of the equity award). Prior to January 1, 2006, we accounted for share-based compensation to employees under the intrinsic value method. We apply the fair value method in accounting for stock option grants to non-employees using the Black-Scholes Method.

Recent Accounting Pronouncements

In September 2006, the FASB issued a new standard which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. The new standards does not require new fair value measurements, rather, its provisions will apply when fair value measurements are performed under other accounting pronouncements. The standard is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. In February 2008, the standard was deferred for one year as it applies to nonfinancial assets and liabilities that are recognized or disclosed at fair value on a nonrecurring basis (e.g. those measured at fair value in a business combination and goodwill impairment). We are reviewing the potential impact, if any, of this new guidance.

In February 2007, the FASB issued a new standard that permits entities to choose to measure many financial instruments and certain other items at fair value. This standard expands the use of fair value measurement and applies to entities that elect the fair value option. The fair value option established by the new standard permits all entities to choose to measure eligible items at fair value at specified election dates and is effective for fiscal years beginning after November 15, 2007. We do not expect the adoption of this pronouncement to have a material impact on our financial position or results of operations.

In December 2007, the FASB issued enhanced guidance related to the measurement of identifiable assets acquired, liabilities assumed and disclosure of information related to business combinations and their effect. The standard applies prospectively to business combinations in 2009 and is not subject to early adoption. We are currently evaluating the potential impact of this new guidance on business combinations and related valuations.

In December 2007, the FASB issued a new standard for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. Specifically, this statement requires the recognition of a noncontrolling interest (minority interest) as a component of consolidated equity. This is a change from the current practice to present noncontrolling interests in liabilities or between liabilities and stockholders’ equity. Similarly, the new standard requires consolidated net income and comprehensive

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income to be reported at amounts that include the amounts attributable to both the parent and the noncontrolling interests. The standard is effective prospectively with respect to transactions involving noncontrolling financial interests that occur on or after January 1, 2009. We are currently evaluating the potential impact, if any, of this new guidance.

Disclosures about Contractual Obligations and Commercial Commitments

The following table sets forth our obligations and commitments to make future payments under its lease agreements and other long-term obligations as of December 31, 2007:

(Amounts in thousands)	Payments due by Period
			Less than						After 5
Contractual Obligations	Total		1 Year		1-3 Years		3-5 Years		Years
Long-term debt
Principal (1)	$	266,250	$	—	$	85,000	$	181,250	$	—
Interest (2)		50,970		17,567		32,997		406		—
Asset retirement obligations		104,493		—		256		266		103,971
Operating leases for office leases and equipment		7,157		1,821		3,421		1,915		—
Rig commitments (3)		81,600		44,100		37,500		—		—
Total Contractual Obligations	$	510,470	$	63,488	$	159,174	$	183,837	$	103,971

(1)	Repayment of the initial borrowing base on the senior bank facility is based on reserve estimates, which are reassessed every six months.
(2)	Assumes a 3.25% LIBOR rate.
(3)	As is common in the oil and gas industry, we operate in many instances through joint ventures under joint operating or similar agreements. Typically, the operator under a joint operating agreement enters into contracts, such as rig commitment contracts, for the benefit of all joint venture partners. Through the joint operating agreement, the non-operators reimburse, and in some cases advance, the funds necessary to meet the contractual obligations entered into by the operator. These obligations are typically shared on a “working interest” basis. The joint operating agreement provides remedies to the operator in the event that the non-operator does not satisfy its share of the contractual obligations. Occasionally, the operator is permitted by the joint operating agreement to enter into lease obligations and other contractual commitments that are then passed on to the non-operating joint interest owners as lease operating expenses, frequently without any identification as to the long-term nature of any commitments underlying such expenses.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Foreign Exchange Risk

The international scope of our business operations exposes us to the risk of fluctuations in foreign currency markets. As a result, we are subject to foreign currency exchange rate risk due to effects that foreign exchange rate movements have on our costs and on the cash flows that we receive from foreign

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operations. Our oil revenues are received in U.S. dollars while gas revenues are received in pounds sterling or Norwegian kroner. Capital expenditures, payroll and operating expenses may be denominated in U.S. dollars, pounds sterling or Norwegian kroner. We operate a centralized currency management operation to take advantage of potential opportunities to naturally offset exposures against each other. To date, we have addressed our foreign currency exchange rate risks principally by maintaining our liquid assets in interest-bearing accounts, until payments in foreign currency are required, but we have not reduced this risk by hedging to date.

Commodity Price Risk

We produce and sell crude oil and natural gas. Realized pricing is primarily driven by the prevailing worldwide price for crude oil and regional gas spot market prices which have been volatile and unpredictable for several years. As a result, our financial results can be significantly impacted as these commodity prices fluctuate widely in response to changing market forces. We may engage in oil and gas hedging activities to realize commodity prices which we consider favorable.

At December 31, 2007, we had the following commodity derivative instruments outstanding:

(Amounts in thousands, except unit and per unit data)	2008			2009			2010			2011			Total
Oil:
Fixed Price Swap (Mbbl)		907			697			573			487			2,664
Weighted Average Price ($/Barrel)	$	68.87		$	69.08		$	68.39		$	66.01		$	68.30
Gas: (1)
Fixed Price Swap (MMcf)		2,676			1,387			1,032			627			5,722
Weighted Average Price (£/Mcf)	£	5.81		£	5.58		£	5.35		£	5.13		£	5.60
Costless Collar (MMcf)		1,200			—			—			—			1,200
Weighted Average Ceiling Price (£/Mcf)	£	4.53			—			—			—		£	4.53
Weighted Average Floor Price (£/Mcf)	£	3.53			—			—			—		£	3.53
Net Fair Market Value - Asset (Liability):
Oil	$	(20,939	)	$	(12,717	)	$	(9,160	)	$	(8,085	)	$	(50,901	)
Gas		2,217			962			645			207			4,031
Total	$	(18,722	)	$	(11,755	)	$	(8,515	)	$	(7,878	)	$	(46,870	)

⁽¹⁾ Gas derivative contracts are designated in therms and have been converted to Mcf at a rate of 10 therm to 1 Mcf. The exchange rate at December 31, 2007 was $1.98 to £1.00.

At December 31, 2007 and 2006, the prices used to determine the estimates of future cash inflows were $96.02 and $58.93 per barrel, respectively, for oil and $10.03 and $4.71 per Mcf, respectively, for gas.

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Interest Rate Risk

We are exposed to changes in interest rates. Changes in interest rates affect the interest earned on cash and cash equivalents and the interest rate paid on borrowings under debt.

In 2007, we entered into an interest rate swap for a notional amount of $37.5 million whereby we pay a fixed rate of 5.05% and receive three-month LIBOR through November 2009. A 250 change in basis points on LIBOR would result in a $0.4 million change in our annual interest expense, given our floating rate debt at December 31, 2007 and the interest rate swap.

45

Item 8. Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
Endeavour International Corporation:

We have audited the accompanying consolidated balance sheets of Endeavour International Corporation and subsidiaries as of December 31, 2007 and 2006, and the related consolidated statements of operations, stockholders’ equity and comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2007. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Endeavour International Corporation and subsidiaries as of December 31, 2007 and 2006, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2007, in conformity with U.S. generally accepted accounting principles.

As discussed in Note 2 to the consolidated financial statements, effective January 1, 2006, the Company changed its method of accounting for share-based payments. As also discussed in Note 2 to the consolidated financial statements, effective January 1, 2007, the Company changed its accounting for uncertain tax positions.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Endeavour International Corporation’s internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 14, 2008 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

KPMG LLP

Houston, Texas
March 14, 2008

46

Endeavour International Corporation
Consolidated Balance Sheets
(Amounts in thousands, except share data)

	December 31,
	2007			2006
Assets
Current Assets:
Cash and cash equivalents	$	16,440		$	39,814
Restricted cash		22,000			1,867
Accounts receivable		33,291			61,104
Prepaid expenses and other current assets		46,516			25,783
Total Current Assets		118,247			128,568
Property and Equipment, Net (Note 5)		335,023			319,315
Goodwill		283,324			291,752
Other Assets		11,029			34,835
Total Assets	$	747,623		$	774,470
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable	$	31,036		$	36,928
Current maturities of debt		—			2,410
Accrued expenses and other		50,013			41,799
Total Current Liabilities		81,049			81,137
Long-Term Debt		266,250			303,840
Deferred Taxes		135,552			115,155
Other Liabilities		69,623			32,510
Total Liabilities		552,474			532,642
Commitments and Contingencies
Series C Convertible Preferred Stock (Liquidation preference: $126,833)		125,000			125,000
Stockholders’ Equity:
Series B Preferred stock (Liquidation preference: $2,799)					—
Common stock; shares issued and outstanding – 127,006,440 at 2007 and 118,577,369 at 2006		127			119
Additional paid-in capital		241,539			226,988
Accumulated other comprehensive loss		(923	)		—
Accumulated deficit		(170,594	)		(110,279	)
Total Stockholders’ Equity		70,149			116,828
Total Liabilities and Stockholders’ Equity	$	747,623		$	774,470

The accompanying notes are an integral part of these consolidated financial statements.

47

Endeavour International Corporation
Consolidated Statements of Operations
(Amounts in thousands, except per share data)

	For the Year Ended December 31,
	2007			2006			2005
Revenues	$	176,064		$	54,131		$	38,656
Expenses:
Operating expenses		41,044			15,568			11,990
Depreciation, depletion and amortization		76,850			20,164			9,337
Impairment of oil and gas properties		—			849			27,116
Equity loss from entities with oil and gas properties		—			—			79
General and administrative		19,878			21,924			18,223
Total expenses		137,772			58,505			66,745
Operating Profit (Loss)		38,292			(4,374	)		(28,089	)
Other Income (Expense):
Commodity derivatives:
Unrealized gain (loss)		(89,132	)		34,531			—
Realized gain		12,048			—			—
Interest expense		(18,742	)		(7,941	)		(4,322	)
Interest income		2,312			2,265			2,605
Litigation settlement expense		—			—			(5,265	)
Gain on sale of oil and gas assets		—			—			14,966
Other		(3,035	)		(7,406	)		263
Total Other Income (Expense)		(96,549	)		21,449			8,247
Income (Loss) Before Minority Interest		(58,257	)		17,075			(19,842	)
Minority Interest		—			—			(470	)
Income (Loss) Before Income Taxes		(58,257	)		17,075			(20,312	)
Income Tax (Benefit) Expense		(9,180)	)		23,913			11,061
Net Loss		(49,077	)		(6,838	)		(31,373	)
Preferred Stock Dividends		11,238			1,991			158
Net Loss to Common Stockholders	$	(60,315	)	$	(8,829	)	$	(31,531	)
Net Loss Per Common Share — Basic and Diluted	$	(0.49	)	$	(0.10	)	$	(0.42	)
Weighted Average Number of Common Shares Outstanding — Basic and Diluted		123,118			86,636			74,433

The accompanying notes are an integral part of these consolidated financial statements.

48

Endeavour International Corporation
Consolidated Statements of Cash Flows
(Amounts in thousands)

	Year Ended December 31,
	2007			2006			2005
Cash Flows from Operating Activities:
Net loss	$	(49,077	)	$	(6,838	)	$	(31,373	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation, depletion and amortization		76,850			20,164			9,337
Impairment of oil and gas properties		—			849			27,116
Deferred tax expense (benefit)		(12,925	)		13,038			3,243
Unrealized (gain) loss on derivative instruments		89,132			(34,531	)		—
Amortization of non-cash compensation		4,968			11,573			7,070
Financing costs expensed		—			3,750			—
Impairment of marketable securities		—			1,775			—
Litigation settlement expense		—			—			5,265
Gain on sale of oil and gas assets		—			—			(14,966	)
Other		4,026			883			567
Changes in assets and liabilities:
(Increase) Decrease in receivables		30,127			(32,165	)		(688	)
(Increase) Decrease in prepaid expenses and other		(984	)		(9,749	)		3,637
Increase (Decrease) in current liabilities		(13,611	)		17,151			18,754
Net Cash Provided by (Used in) Operating Activities		128,506			(14,100	)		27,962
Cash Flows From Investing Activities:
Capital expenditures		(88,007	)		(55,496	)		(47,396	)
Acquisitions, net of cash acquired		—			(376,915	)		(1,437	)
Proceeds from sale of assets		—			—			19,465
(Increase) decrease in restricted cash and other investing activities		(20,133	)		5,293			(5,604	)
Net Cash Used in Investing Activities		(108,140	)		(427,118	)		(34,972	)
Cash Flows From Financing Activities:
Repayment of borrowings		(47,000	)		—			(4,006	)
Proceeds from borrowings		7,000			225,000			81,250
Financing costs paid		(263	)		(9,565	)		(3,661	)
Proceeds from warrant and stock option exercises		—			3,310			1,956
Proceeds from common issued and issuable, net of issuance costs		—			83,967			—
Proceeds from preferred stock issued and issuable, net of issuance costs		—			100,657			—
Payment of preferred dividends		(2,656	)		—			—
Other financing activities		(821	)		—			(128	)
Net Cash Provided by (Used in) Financing Activities		(43,740	)		403,369			75,411
Net Increase (Decrease) in Cash and Cash Equivalents		(23,374	)		(37,849	)		68,401
Effect of Foreign Currency Changes on Cash		—			1,536			(1,249	)
Cash and Cash Equivalents, Beginning of Period		39,814			76,127			8,975
Cash and Cash Equivalents, End of Period	$	16,440		$	39,814		$	76,127

The accompanying notes are an integral part of these consolidated financial statements.

49

Endeavour International Corporation
Consolidated Statements of Stockholders’ Equity and Comprehensive Income (Loss)
(Amounts in thousands)

									Accumulated
			Additional						Other						Total			Total
	Common		Paid-In			Deferred			Comprehensive			Accumulated			Stockholders’			Comprehensive
	Stock		Capital			Compensation			Loss			Deficit			Equity			Income (Loss)
Balance, December 31, 2004	$	70	$	133,919		$	(6,570	)	$	(528	)	$	(69,919	)	$	56,972
Issuance of common stock for acquisition of OER net of expenses		2		9,256			—			—			—			9,258
Issuance of common stock as deferred compensation		2		11,102			(9,967	)		—			—			1,137
Exercise of warrants and options		1		1,955			—			—			—			1,956
Other issuances of common stock		—		57			267			—			—			324
Amortization of deferred compensation		—		—			6,833			—			—			6,833
Preferred 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	)

The accompanying notes are an integral part of these consolidated financial statements.

50

Endeavour International Corporation
Consolidated Statements of Stockholders’ Equity and Comprehensive Income (Loss)
(Amounts in thousands)

									Accumulated
			Additional						Other						Total			Total
	Common		Paid-In			Deferred			Comprehensive			Accumulated			Stockholders’			Comprehensive
	Stock		Capital			Compensation			Loss			Deficit			Equity			Income (Loss)
Balance, December 31, 2005	$	75	$	155,734		$	(9,437	)	$	(4,578	)	$	(101,450	)	$	40,344
Adoption of stock-based compensation accounting standards				(9,110	)		9,437			—			—			327
Issuance of common stock as deferred compensation		2		473			—			—			—			475
Exercise of warrants and options		2		3,308			—			—			—			3,310
Other issuances of common stock		40		89,353			—			—			—			89,393
Amortization of deferred compensation		—		11,573			—			—			—			11,573
Expenses related to Convertible Preferred Stock offering		—		(24,343	)		—			—			—			(24,343	)
Preferred stock dividend		—		—						—			(1,991	)		(1,991	)
Comprehensive Loss:
Net Loss		—		—			—			—			(6,838	)		(6,838	)	$	(6,838	)
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		—		—			—			888			—			888			888
Balance, December 31, 2006	$	119	$	226,988		$	—		$	—		$	(110,279	)	$	116,828		$	(2,260	)
Balance, December 31, 2006	$	119	$	226,988		$	—		$	—		$	(110,279	)	$	116,828
Preferred stock dividend		6		10,509									(11,238	)		(723	)
Amortization of deferred compensation		—		4,975			—			—			—			4,975
Other		2		(933	)		—			—			—			(931	)
Comprehensive Loss:
Net Loss		—		—			—			—			(49,077	)		(49,077	)	$	(49,077	)
Other comprehensive income (net of tax):
Unrealized loss on derivative instruments, net of tax		—		—			—			(852	)		—			(852	)		(852	)
Unrealized gain (loss) on available-for- sale securities		—		—			—			(71	)		—			(71	)		(71	)
Balance, December 31, 2007	$	127	$	241,539		$	—		$	(923	)	$	(170,594	)	$	70,149		$	(50,000	)

The accompanying notes are an integral part of these consolidated financial statements.

51

Endeavour International Corporation
Notes to Consolidated Financial Statements

Note 1 — Description of Business

Endeavour International Corporation was incorporated under the laws of the state of Nevada on January 13, 2000. As used in these Notes to Consolidated Financial Statements, the terms “Endeavour”, “we”, “us”, “our” and similar terms refer to Endeavour International Corporation and, unless the context indicates otherwise, its consolidated subsidiaries.

In the fourth quarter of 2006, we completed our previously-announced acquisition of all of the outstanding shares of Talisman Expro Limited acquiring interests in eight fields in the United Kingdom sector of the North Sea. See Note 3.

Note 2 — Summary of Significant Accounting Policies

Basis of Presentation and Use of Estimates

The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and have been presented on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. These accounting principles require management to use estimates, judgments and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, and revenues and expenses during the reporting period. Management reviews its estimates, including those related to the determination of proved reserves, estimates of future dismantlement costs, income taxes and litigation. Actual results could differ from those estimates. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included in these financial statements. Certain amounts for prior periods have been reclassified to conform to the current presentation.

Management believes it is reasonably possible that the following material estimates affecting the financial statements could change in the coming year: (1) estimates of proved oil and gas reserves, (2) estimates as to the expected future cash flow from proved oil and gas properties, (3) estimates of future dismantlement and restoration costs, (4) estimates of fair values used in purchase accounting and (5) estimates of the fair value of derivative instruments.

Principles of Consolidation

The accompanying consolidated financial statements include all of the accounts of Endeavour and our consolidated subsidiaries. All significant intercompany accounts and transactions have been eliminated. Investments in entities over which we have significant influence, but not control, are carried at cost adjusted for equity in earnings or (losses) and distributions received.

52

Endeavour International Corporation
Notes to Consolidated Financial Statements

Cash and Cash Equivalents

We consider all highly liquid instruments with an original maturity of 90 days or less at the time of purchase to be cash equivalents.

Inventories

Materials and supplies and oil inventories are valued at the lower of cost or market value (net realizable value).

Full Cost Accounting for Oil and Gas Operations

Under the full cost method, all acquisition, exploration and development costs, including certain directly related employee costs and a portion of interest expense, incurred for the purpose of finding oil and gas are capitalized and accumulated in pools on a country-by-country basis. During 2007, 2006 and 2005, we capitalized $8.6 million, $10.9 million and $7.5 million, respectively, in certain directly related employee costs. Capitalized costs include the cost of drilling and equipping productive wells, including the estimated costs of dismantling and abandoning these assets, dry hole costs, lease acquisition costs, seismic and other geological and geophysical costs, delay rentals and costs related to such activities. Employee costs associated with production and other operating activities and general corporate activities are expensed in the period incurred.

Capitalized costs are limited on a country-by-country basis (the ceiling test). The ceiling test limitation is calculated as the sum of the present value of future net cash flows related to estimated production of proved reserves, using end-of-the-current-period prices including the effect of derivative instruments that qualify as cash flow hedges, discounted at 10%, plus the lower of cost or estimated fair value of unproved properties, all net of expected income tax effects. Under the ceiling test, if the capitalized cost of the full cost pool, net of deferred taxes, exceeds the ceiling limitation, the excess is charged as an impairment expense.

We utilize a single cost center for each country where we have operations for amortization purposes. Any conveyances of properties are treated as adjustments to the cost of oil and gas properties with no gain or loss recognized unless the operations are suspended in the entire cost center or the conveyance is significant in nature.

Unproved property costs include the costs associated with unevaluated properties and properties under development and are not initially included in the full cost amortization base (where proved reserves exist) until the project is evaluated. These costs include unproved leasehold acreage, seismic data, wells and production facilities in progress and wells pending determination, together with interest costs capitalized for these projects. Seismic data costs are associated with specific unevaluated properties where the seismic data is acquired for the purpose of evaluating acreage or trends covered by a leasehold interest owned by us. Significant unproved properties are assessed periodically for possible impairment or reduction in value. If a reduction in value has occurred, these property costs are considered impaired and are transferred to the related full cost pool. Geological and geophysical costs included in unproved properties are transferred to the full cost amortization base along with the associated leasehold costs on a specific project basis. Costs associated with wells in progress and wells pending determination are transferred to the amortization base once a determination is made whether or not proved reserves can be

53

Endeavour International Corporation
Notes to Consolidated Financial Statements

assigned to the property. Costs of dry holes are transferred to the amortization base immediately upon determination that the well is unsuccessful. Unproved properties whose acquisition costs are not individually significant are aggregated, the portion of such costs estimated to be ultimately nonproductive, based on experience, are amortized to the full cost pool over an average holding period.

In countries where the existence of proved reserves has not yet been determined, unevaluated property costs remain capitalized in unproved property cost centers until proved reserves have been established, exploration activities cease or impairment and reduction in value occurs. If exploration activities result in the establishment of a proved reserve base, amounts in the unproved property cost center are reclassified as proved properties and become subject to amortization and the application of the ceiling test. When it is determined that the value of unproved property costs have been permanently diminished (in part or in whole) based on the impairment evaluation and future exploration plans, the unproved property cost centers related to the area of interest are impaired, and accumulated costs charged against earnings.

Other Property and Equipment

Other oil and gas assets, computer equipment and furniture and fixtures are recorded at cost, less accumulated depreciation. The assets are depreciated using the straight-line method over their estimated useful lives of two to five years.

Capitalized Interest

We capitalize interest on expenditures for significant exploration and development projects while activities are in progress to bring the assets to their intended use. Capitalized interest is calculated by multiplying our weighted-average interest rate on debt by the amount of qualifying costs and is limited to gross interest expense. As costs are transferred to the full cost pool, the associated capitalized interest is also transferred to the full cost pool. During 2007, 2006 and 2005, we capitalized $7.2 million, $1.2 million and $0.8 million, respectively, in interest.

Marketable Securities

The marketable securities reflected in these financial statements are deemed by management to be “available-for-sale” and, accordingly, are reported at fair value, with unrealized gains and losses reported in other comprehensive income and reflected as a separate component within the Statement of Stockholders’ Equity unless we determine that an other-than-temporary impairment has occurred. Realized gains and losses on securities available-for-sale are included in other income/expense and, when applicable, are reported as a reclassification adjustment, net of tax, in other comprehensive income. Gains and losses on the sale of available-for-sale securities are determined using the specific-identification method.

Goodwill and Intangible Assets

Goodwill represents the excess of the purchase price over the estimated fair value of the assets acquired and liabilities assumed in an acquisition. Intangible assets represent the purchase price allocation to the assembled workforce as a result of the acquisition in 2004. We assess the carrying amount of goodwill and other indefinite-lived intangible assets by testing the asset for impairment annually at year-end, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The

54

Endeavour International Corporation
Notes to Consolidated Financial Statements

impairment test requires allocating goodwill and all other assets and liabilities to reporting units. The fair value of each reporting unit is determined and compared to the book value of the reporting unit. An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value.

Dismantlement, Restoration and Environmental Costs

We recognize liabilities for asset retirement obligations associated with tangible long-lived assets, such as producing well sites, offshore production platforms, and natural gas processing plants, with a corresponding increase in the related long-lived asset. The asset retirement cost is depreciated along with the property and equipment in the full cost pool. The asset retirement obligation is recorded at fair value and accretion expense, recognized over the life of the property, increases the liability to its expected settlement value. If the fair value of the estimated asset retirement obligation changes, an adjustment is recorded for both the asset retirement obligation and the asset retirement cost.

Revenue Recognition

We use the entitlements method to account for sales of gas production. We may receive more or less than our entitled share of production. Under the entitlements method, if we receive more than our entitled share of production, the imbalance is treated as a liability at the market price at the time the imbalance occurred. If we receive less than our entitled share, the imbalance is recorded as an asset at the lower of the current market price or the market price at the time the imbalance occurred. Oil revenues are recognized when production is sold to a purchaser at a fixed or determinable price, when delivery has occurred, title has transferred and collectibility of the revenue is probable.

Significant Customers

Our oil sales are to a limited number of customers, StatoilHydro and Shell International Trading and Shipping Company, Limited and our gas and natural gas liquids sales are to StatoilHydro, Shell UK Limited and Esso Exploration and Production UK Limited.

Derivative Instruments and Hedging Activities

From time to time, we may utilize derivative financial instruments to hedge cash flows from operations or to hedge the fair value of financial instruments. We may use derivative financial instruments with respect to a portion of our oil and gas production or a portion of our variable rate debt to achieve a more predictable cash flow by reducing our exposure to price fluctuations. These transactions are likely to be swaps, collars or options and to be entered into with major financial institutions or commodities trading institutions. Derivative financial instruments are intended to reduce our exposure to declines in the market prices of crude oil and natural gas that we produce and sell, to increases in interest rates and to manage cash flows in support of our annual capital expenditure budget.

Regardless of whether the derivative instrument is accounted for as a hedge or not, derivative instruments (including certain derivative instruments embedded in other contracts) are recorded at fair market value and included in the balance sheets as assets or liabilities. The accounting for changes in the fair value of a derivative instrument that is not accounted for as a hedge is included in other (income) expense as an unrealized gain or loss. The accounting for changes in the fair value of a derivative instrument depends on the intended use of the derivative and the resulting designation, which is established at its inception.

55

Endeavour International Corporation
Notes to Consolidated Financial Statements

Where we intend to account for a derivative as a hedge, we document, at its inception, the hedging relationship, the risk management objective and the strategy for undertaking the hedge. The documentation includes the identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged, and the method that will be used to assess effectiveness of derivative instruments that receive hedge accounting treatment.

We discontinue hedge accounting prospectively when (1) we determine that the derivative is no longer effective in offsetting changes in the fair value or cash flows of a hedged item (including hedged items such as firm commitments or forecasted transactions); (2) the derivative expires; (3) it is no longer probable that the forecasted transaction will occur; (4) a hedged firm commitment no longer meets the definition of a firm commitment; or (5) management determines that designating the derivative as a hedging instrument is no longer appropriate.

Derivative instruments designated as cash flow hedges are reflected at fair value in our Consolidated Balance Sheets. Changes in fair value, to the extent the hedge is effective, are recognized in other comprehensive income until the forecasted transaction occurs. Hedge effectiveness is assessed at least quarterly based on total changes in the derivative’s fair value. Any ineffective portion of the derivative instrument’s change in fair value is recognized immediately in other (income) expense. Changes in the fair value of derivative instruments not designated as a hedge are recognized in the income statement.

Concentrations of Credit and Market Risk

Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash deposits at financial institutions. At various times during the year, we may exceed the federally insured limits. To mitigate this risk, we place our cash deposits only with high credit quality institutions. Management believes the risk of loss is minimal.

Derivative financial instruments that hedge the price of oil and gas, interest rates or currency exposure will be generally executed with major financial or commodities trading institutions which expose us to market and credit risks, and may at times be concentrated with certain counterparties or groups of counterparties. Although notional amounts are used to express the volume of these contracts, the amounts potentially subject to credit risk, in the event of non-performance by the counterparties, are substantially smaller. The creditworthiness of counterparties is subject to continuing review and full performance is anticipated.

As an independent oil and gas producer, our revenue, profitability and future rate of growth are substantially dependent upon prevailing prices for oil and gas, which are dependent upon numerous factors beyond our control, such as economic, political and regulatory developments and competition from other sources of energy. The energy markets have historically been very volatile, and there can be no assurance that oil and gas prices will not be subject to wide fluctuations in the future. A substantial or extended decline in oil and gas prices could have a material adverse effect on our financial position, results of operations, cash flows and our access to capital and on the quantities of oil and gas reserves that may be economically produced.

Foreign Currency Translation

The U.S. dollar is the functional currency for all of our existing operations, as a majority of all revenue and financing transactions in these operations are denominated in U.S. dollars. For foreign operations

56

Endeavour International Corporation
Notes to Consolidated Financial Statements

with the U.S. dollar as the functional currency, monetary assets and liabilities are remeasured into U.S. dollars at the exchange rate on the balance sheet date. Nonmonetary assets and liabilities are translated into U.S. dollars at historical exchange rates. Income and expense items are translated at exchange rates prevailing during each period. Adjustments are recognized currently as a component of foreign currency gain or loss and deferred income taxes. To the extent that business transactions are not denominated in U.S. dollars, we are exposed to foreign currency exchange rate risk. For the years ended December 31, 2007, 2006 and 2005, we had foreign currency gains (losses) of $(1.4) million, $(1.5) million and $0.2 million, respectively, included in other income and $(4.8) million, $(4.8) million and $1.8 million, respectively, included in income tax expense.

Income Taxes

We use the liability method of accounting for income taxes under which deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities, and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as part of the provision for income taxes in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of, or all of, the deferred tax assets will not be realized.

Adoption of Accounting for Uncertainty in Income Taxes

In July 2006, the Financial Accounting Standards Board issued a new interpretation that seeks to reduce the diversity in practice associated with certain aspects of measurement and recognition in accounting for income taxes. This new interpretation also provides guidance on classification, derecognition, interest, penalties and accounting in interim periods and also requires expanded disclosure with respect to the uncertainty in income taxes. The interpretation was effective for us as of January 1, 2007. Our adoption of this standard on January 1, 2007 did not have a material effect on our financial statements.

Adoption of Fair Value Accounting for Share-Based Payments

In December 2004, the Financial Accounting Standards Board (“FASB”) revised rules that require all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. We adopted these new rules effective January 1, 2006 using the modified prospective method in which the prior period financial statements are not restated. The share-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as general and administrative expense over the employee’s requisite service period (generally the vesting period of the equity award). Prior to January 1, 2006, we accounted for share-based compensation to employees under the intrinsic value method. We apply the fair value method in accounting for stock option grants to non-employees using the Black-Scholes Method.

The adoption of these new rules resulted in a cumulative effect of change in accounting principle, net of tax, of less than $60,000. Because the amount was immaterial, we have included it in general and administrative expense on our consolidated statement of income.

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Endeavour International Corporation
Notes to Consolidated Financial Statements

It is our policy to use authorized but unissued shares of stock when stock options are exercised. At December 31, 2007, we had approximately 8.2 million additional shares available for issuance pursuant to our existing stock incentive plan.

For periods prior to January 1, 2006, we accounted for stock-based compensation plans for employees and directors using the intrinsic value method. Under this method, we record no compensation expense for stock options granted when the exercise price of options granted is equal to or greater than the fair market value of our common stock on the date of grant.

Loss Per Share

Basic loss per common share is computed by dividing net loss to common stockholders by the weighted average number of common shares outstanding for the period. Diluted loss per share includes the effect of our outstanding stock options, warrants and shares issuable pursuant to convertible debt, convertible preferred stock and certain stock incentive plans under the treasury stock method, if including such instruments is dilutive.

For each of the periods presented, shares associated with stock options, warrants, convertible debt, convertible preferred stock and certain stock incentive plans are not included because their inclusion would be antidilutive (i.e., reduce the net loss per share).

The common shares potentially issuable arising from these instruments, which were outstanding during the periods presented in the financial statements, consisted of:

(Amounts in thousands)	December 31,
	2007		2006		2005
Options and stock-based compensation		—		626		1,796
Warrants		—		219		1,275
Convertible debt		16,185		16,185		14,984
Convertible preferred stock		50,000		8,356		—
Common shares potentially issuable		66,185		25,386		18,055

Recent Accounting Pronouncements

In September 2006, the FASB issued a new standard which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. The new standards does not require new fair value measurements, rather, its provisions will apply when fair value measurements are performed under other accounting pronouncements. The standard is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. In February 2008, the standard was deferred for one year as it applies to nonfinancial assets and liabilities that are recognized or disclosed at fair value on a nonrecurring basis (e.g. those measured at fair value in a business combination and goodwill impairment). We are reviewing the potential impact, if any, of this new guidance.

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Endeavour International Corporation
Notes to Consolidated Financial Statements

In February 2007, the FASB issued a new standard that permits entities to choose to measure many financial instruments and certain other items at fair value. This standard expands the use of fair value measurement and applies to entities that elect the fair value option. The fair value option established by the new standard permits all entities to choose to measure eligible items at fair value at specified election dates and is effective for fiscal years beginning after November 15, 2007. We do not expect the adoption of this pronouncement to have a material impact on our financial position or results of operations.

In December 2007, the FASB issued enhanced guidance related to the measurement of identifiable assets acquired, liabilities assumed and disclosure of information related to business combinations and their effect. The standard applies prospectively to business combinations in 2009 and is not subject to early adoption. We are currently evaluating the potential impact of this new guidance on business combinations and related valuations.

In December 2007, the FASB issued a new standard for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. Specifically, this statement requires the recognition of a noncontrolling interest (minority interest) as a component of consolidated equity. This is a change from the current practice to present noncontrolling interests in liabilities or between liabilities and stockholders’ equity. Similarly, the new standard requires consolidated net income and comprehensive income to be reported at amounts that include the amounts attributable to both the parent and the noncontrolling interests. The standard is effective prospectively with respect to transactions involving noncontrolling financial interests that occur on or after January 1, 2009. We are currently evaluating the potential impact, if any, of this new guidance.

Note 3 — Acquisitions and Dispositions

Acquisition of Talisman Expro Limited

On November 1, 2006, we completed the acquisition of all of the outstanding shares of Talisman Expro Limited for US $366 million, after purchase price adjustments and expenses (the “Talisman Acquisition”). As a result of the Talisman Acquisition, we acquired interests in eight fields in the United Kingdom sector of the North Sea.

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Endeavour International Corporation
Notes to Consolidated Financial Statements

The following is an allocation of the purchase price of the Talisman Acquisition:

(Amounts in thousands)
Purchase price	$	359,594
Legal, accounting and other direct expenses		6,051
Total purchase price	$	365,645
Allocation of purchase price:
Current assets	$	31,598
Property and equipment		209,534
Goodwill		255,528
Current liabilities		(15,718	)
Deferred tax liability		(90,408	)
Other long-term liabilities		(24,889	)
	$	365,645

The purchase price allocation is based on an assessment of the fair value of the assets acquired and liabilities assumed in the Talisman Acquisition. The assessment of the fair values of oil and gas properties acquired was based on projections of expected future net cash flows, discounted to present value. Other assets and liabilities were recorded at their historical book values which we believe represent the best current estimate of fair value.

The following is a reconciliation of the changes in goodwill for the year ended December 31, 2007 and 2006:

	December 31,
(Amounts in thousands)	2007			2006
Balance at beginning of year	$	291,752		$	27,795
Acquisition		(8,428	)		263,957
Balance at end of year	$	283,324		$	291,752

Purchase of Interest in Enoch Field

During the second quarter of 2006, we invested $12 million for the purchase of an eight percent interest in the Enoch Field located in Block 16/13a in the North Sea.

Acquisition of OER oil AS

In November 2004, we purchased a 76.66% majority interest in OER oil AS (“OER”) for $27.6 million in cash, plus $0.8 million in professional expenses for legal and accounting services. In January 2005, we purchased the remaining 23.34% minority interest for approximately $1.4 million in cash and 2.2 million shares of our common stock.

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Endeavour International Corporation
Notes to Consolidated Financial Statements

Sale of Thailand Interests

During 2005, we sold our interest in a partnership with interests in Thailand oil and gas properties for net cash proceeds of $19 million and a gain of $15 million.

Note 4 — Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following:

	December 31,
(Amounts in thousands)	2007		2006
Current deferred tax asset	$	30,167	$	—
Current tax receivable		4,083		—
Crude oil inventory		1,594		892
Fair market value of commodity derivatives — current		4,018		18,396
Prepaid insurance		1,255		1,280
Collateral account for derivative instruments		—		478
Other		5,399		4,737
	$	46,516	$	25,783

See Note 7 for additional discussion of commodity derivatives.

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Endeavour International Corporation
Notes to Consolidated Financial Statements

Note 5 — Property and Equipment

Property and equipment included the following:

(Amounts in thousands)	December 31,
	2007			2006
Oil and gas properties under the full cost method:
Subject to amortization	$	298,765		$	219,114
Not subject to amortization:
Acquired in 2007		31,992			—
Acquired in 2006		97,922			117,281
Acquired in 2005		15,108			15,108
Acquired prior to 2005		12,507			16,797
		456,294			368,300
Other oil and gas activities		4,875			4,875
Computers, furniture and fixtures		2,634			1,940
Total property and equipment		463,803			375,115
Accumulated depreciation, depletion and amortization		(128,780	)		(55,800	)
Net property and equipment	$	335,023		$	319,315

The majority of costs not subject to amortization relate to values assigned to unproved reserves acquired. The remainder of costs not subject to amortization relate to exploration costs such as drilling costs for projects awaiting approved development plan or the determination of whether or not proved reserves can be assigned and other seismic and geological and geophysical costs. These costs are transferred to the amortization base when it is determined whether or not proved reserves can be assigned to such properties. This analysis is dependent upon well performance, results of infield drilling, approval of development plans, drilling results and development of identified projects and periodic assessment of reserves. We expect acquisition costs excluded from amortization to be transferred to the amortization base over the next five years due to a combination of well performance and results of infield drilling relating to currently producing assets and the drilling and development of identified projects acquired, such as the Rochelle field. We expect exploration costs not subject to amortization to be transferred to the amortization base over the next three years as development plans are completed and production commences on existing discoveries such as the Columbus and Cygnus projects.

The following is a summary of our oil and gas properties not subject to amortization as of December 31, 2007:

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Endeavour International Corporation
Notes to Consolidated Financial Statements

	Costs Incurred in the Year Ended December 31,
(Amounts in thousands)	2007		2006		2005		Prior to 2005		Total
Acquisition costs	$	—	$	61,225	$	—	$	6,191	$	67,416
Exploration costs		30,370		35,632		14,582		6,316		86,900
Capitalized interest		1,622		1,065		526		—		3,213
Total oil and gas properties not subject to amortization	$	31,992	$	97,922	$	15,108	$	12,507	$	157,529

During 2006 and 2005, we recorded $0.8 million and $27.1 million, respectively, in impairment of oil and gas properties related to four exploratory wells.

Note 6 — Other Assets

Other long-term assets consisted of the following at December 31:

(Amounts in thousands)	2007			2006
Intangible assets — workforce in place:
Gross	$	4,800		$	4,800
Accumulated amortization		(2,806	)		(2,250	)
		1,994			2,550
Fair market value of long-term portion of commodity derivatives (see Note 7)		1,957			23,860
Debt issuance costs		6,857			8,249
Other		221			176
	$	11,029		$	34,835

Intangible assets represent the purchase price allocated to the assembled workforce as a result an acquisition. During 2006, one of our co-chief executive officers became chairman of the board, president and chief executive officer. Concurrently, our other co-chief executive officer became vice chairman of the board and ceased being our employee although he continued in a consultancy role during 2007. As a result, we assessed the carrying amount of the intangible asset related to our workforce-in-place and determined an impairment of $1.2 million, included in DD&A expense, was necessary. The remaining value of the intangible asset is being amortized over its estimated life of six years using the straight-line method. Estimated amortization expense is $0.6 million for each year through December 31, 2010.

Debt issuance costs are amortized over the life of the related debt obligation.

At December 31, 2006, we determined that our investment in equity securities were subject to an other-than-temporary impairment. Therefore, we recorded an impairment of $1.8 million for 2006 as we impaired the value of the equity securities to the fair market value of the securities, based on the quoted market price of the securities at December 31, 2006.

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Endeavour International Corporation
Notes to Consolidated Financial Statements

Note 7 — Derivative Instruments

During 2006 and 2005, we had an oil commodity swap that has been accounted for as a hedge where we paid market IPE Brent and received a fixed price. For 2006 and 2005, we realized $5.5 million and $2.3 million, respectively, as a reduction to revenue related to settlements for this contract. We did not exclude any component of the hedging instrument’s gain or loss when assessing effectiveness.

In connection with the Talisman Acquisition, we entered into various oil and gas derivative instruments to stabilize cash flows from the acquired assets and satisfy certain obligations under the financing agreements that funded the acquisition. Hedge accounting has not been elected for these instruments and we recorded $(89.1) million and $34.5 million in 2007 and 2006, respectively, in other income (expense) related to the net unrealized gains (losses) for these instruments. In addition, we realized $12.0 million in gains on the settlement of instruments that closed during 2007. The fair market value of these derivative instruments is included in our balance sheet as follows:

(Amounts in thousands)	December 31,
	2007			2006
Prepaid expenses and other current assets	$	4,018		$	18,395
Other assets — long-term		1,957			23,861
Accrued expenses and other		(22,210	)		—
Other liabilities — long-term		(30,635	)		—
	$	(46,870	)	$	42,256

At December 31, 2007, we had the following derivative instruments outstanding that are not accounted for as hedges:

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Endeavour International Corporation
Notes to Consolidated Financial Statements

(Amounts in thousands, except unit and per unit
data)	2008			2009			2010			2011			Total
Oil:
Fixed Price Swap (Mbbl)		907			697			573			487			2,664
Weighted Average Price ($/Barrel)	$	68.87		$	69.08		$	68.39		$	66.01		$	68.30
Gas: (1)
Fixed Price Swap (MMcf)		2,676			1,387			1,032			627			5,722
Weighted Average Price (£/Mcf)	£	5.81		£	5.58		£	5.35		£	5.13		£	5.60
Costless Collar (MMcf)		1,200			—			—			—			1,200
Weighted Average Ceiling Price (£/Mcf)	£	4.53			—			—			—		£	4.53
Weighted Average Floor Price (£/Mcf)	£	3.53			—			—			—		£	3.53
Net Fair Market Value - Asset (Liability):
Oil	$	(20,939	)	$	(12,717	)	$	(9,160	)	$	(8,085	)	$	(50,901	)
Gas		2,217			962			645			207			4,031
Total	$	(18,722	)	$	(11,755	)	$	(8,515	)	$	(7,878	)	$	(46,870	)

⁽¹⁾ Gas derivative contracts are designated in therms and have been converted to Mcf at a rate of 10 therm to 1 Mcf. The exchange rate at December 31, 2007 was $1.98 to £1.00.

As of December 31, 2007, our outstanding commodity derivatives covered approximately 50% of our anticipated production for 2008.

During 2007, we entered into an interest rate swap for a notional amount of $37.5 million whereby we pay a fixed rate of 5.05% and receive three-month LIBOR through November 2009. The interest rate swap is accounted for as a hedge. We did not exclude any component of the hedging instrument’s gain or loss when assessing effectiveness.

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Endeavour International Corporation
Notes to Consolidated Financial Statements

Note 8 — Accrued Expenses

We had the following accrued expenses outstanding:

(Amounts in thousands)	December 31,
	2007		2006
Derivative liability (see Note 7)	$	22,495	$	—
Foreign taxes payable		12,509		16,509
Accrued interest		4,751		4,446
Prepaid revenue		974		2,776
Preferred dividends		828		2,477
Accrued compensation		754		2,641
Foreign deferred taxes		—		5,335
Accrued joint interest costs		—		3,811
Other		7,702		3,804
	$	50,013	$	41,799

Note 9 — Financial Instruments

	December 31, 2007						December 31, 2006
	Fair Value			Carrying Value			Fair Value		Carrying Value
Assets:
Derivative instruments	$	5,975		$	5,975		$	42,256	$	42,256
Liabilities:
Long-term debt		253,250			266,250			300,156		306,250
Derivative instruments		(53,696	)		(53,696	)		—		—

The carrying amounts reflected in the consolidated balance sheets for cash and equivalents, short-term receivables and short-term payables approximate their fair value due to the short maturity of the instruments. The fair values of commodity derivative instruments interest rate swaps and were determined based upon quotes obtained from brokers. The fair values of long-term debt were determined based upon quotes obtained from brokers for our senior notes and book value for other debt. Book value approximates fair value for our senior bank facility and second lien term loan as these instruments bear interest at a market rate.

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Endeavour International Corporation
Notes to Consolidated Financial Statements

Note 10 — Debt and Notes Payable

Our debt and notes payable consisted of the following:

	December 31,
(Amounts in thousands)	2007		2006
6% Senior notes, due 2012	$	81,250	$	81,250
Senior bank facility		110,000		150,000
Second lien term loan		75,000		75,000
		266,250		306,250
Less: current maturities		—		(2,410	)
Long-term debt	$	266,250	$	303,840

Principal maturities of debt at December 31, 2007 are as follows:

(Amounts in thousands)
2008	$	—
2009		47,000
2010		38,000
2011		100,000
2012		81,250
Thereafter		—

6% Senior notes, due 2012

During 2005, we issued in a private offering $81.25 million aggregate principal amount of convertible senior notes due 2012. The notes bear interest at a rate of 6.00% per annum, payable in January and July. The notes are convertible into shares of our common stock at an initial conversion rate of 199.2032 shares of common stock per $1,000 principal amount of notes, subject to adjustment, which represents an initial conversion price of approximately $5.02 per share. In connection with the issuance of these notes, we paid $3.6 million in financing and other costs. Upon specified change of control events, each holder of those notes may require us to purchase all or a portion of the holder’s notes at a price equal to 100% of the principal amount, plus accrued and unpaid interest, if any, up to but excluding the date of purchase, plus in certain circumstances, a makewhole premium.

Senior bank facility

As part of the financing for the Talisman Acquisition during the fourth quarter of 2006, we entered into a $225 million senior bank facility, subject to a borrowing base limitation. The borrowing base is subject to redetermination every six months with an independent reserve report required every 12 months. At December 31, 2007, the borrowing base capacity was $146 million, of which $110 million was outstanding. With the Talisman Acquisition, we utilized $150 million of the borrowing base. The senior bank facility also provides for issuances of letters of credit of up to an aggregate $60 million. While all

67

Endeavour International Corporation
Notes to Consolidated Financial Statements

letters of credit issued under the senior bank facility will reduce the total amount available for drawing under the senior bank facility, letters of credit issued to secure abandonment liabilities in respect of borrowing base assets will not reduce the amount available under the borrowing base. As of December 31, 2007, we have $40.8 million of outstanding letters of credit related to abandonment liabilities on certain of our oil and gas properties.

Indebtedness under the facility will be secured by cross guarantees from all of our subsidiaries, share pledges from all of our subsidiaries, floating charges over the operating assets held in the United Kingdom and a receivables pledge in Norway. Our borrowings under the senior bank facility will bear interest at LIBOR plus 1.3% for the first $131 million of availability, and LIBOR plus 1.7% for up to an additional $15 million of availability.

The senior bank facility contains customary covenants, which limit our ability to incur indebtedness, pledge our assets, dispose of our assets and make exploration and appraisal expenditures. In addition, the senior bank facility contains various financial and technical covenants, including:

• a maximum consolidated debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”) ratio of 3.0:1;

• a minimum current assets to current liabilities ratio of 1.1:1;

• a minimum debt coverage ratio of 1.2:1 for the initial tranche and 1.15:1 for the second tranche;

• a minimum field life net present value (“NPV”) to loans outstanding coverage ratio of 1.4:1 for the period through March 31, 2009 and 1.5:1 thereafter for the initial tranche, and 1.25:1 for the period through March 31, 2009 and 1.3:1 thereafter for the second tranche; and

• a minimum loan life NPV to loans outstanding coverage ratio of 1.2:1 for the period through March 31, 2009 and 1.3:1 thereafter for the initial tranche, and 1.15:1 for the period through March 31, 2009 and 1.2:1 thereafter for the second tranche.

The final maturity is the earlier of five years or the reserve tail date, being the date when the remaining borrowing base reserves are projected to be 20% or less of the initially approved borrowing base reserves. The senior bank facility is subject to mandatory prepayment in the event of a change of control of any obligor under the senior bank facility agreement. It is prepayable at our option at any time without penalty.

Second lien term loan

As part of the financing for the Talisman Acquisition during the fourth quarter of 2006, we entered into a $75 million second lien term loan. In January 2008, we terminated our obligations under this loan and repaid all of our outstanding indebtedness, including accrued interest and related fees. The details of this transaction are further discussed in Note 21 “Subsequent Events.”

The second lien term loan consisted of a single tranche, which boars interest at LIBOR plus 7%. Our indebtedness under the loan was secured by cross guarantees from all of our subsidiaries and a second ranking interest in the security package provided under the senior bank facility. The second lien term loan contained customary covenants, which limited our ability to incur indebtedness, pledge our assets, dispose of our assets and make exploration and other capital expenditures. In addition, the second lien term loan contained various financial covenants.

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Endeavour International Corporation
Notes to Consolidated Financial Statements

The second lien term loan was scheduled to mature in five years and was subject to mandatory prepayment related to specified percentages of excess cash flow, proceeds of asset sales and proceeds of issuance of debt and equity securities. We had the option to prepay the second lien term loan at any time at a premium, which premium started at 3% in the first year and decreased 1% per year until no premium was payable.

Additional Agreements

On December 26, 2007, we entered into an agreement to sell 11.5% convertible bonds due 2014 in the aggregate principal amount of $40 million to a company controlled by the Smedvig Family Office of Norway. We also borrowed $25 million under a Junior Credit Facility. Both transactions were finalized in January 2008. For additional information regarding these debt agreements, see Note 21 “Subsequent Events.”

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Endeavour International Corporation
Notes to Consolidated Financial Statements

Note 11 — Income Taxes

The loss before income taxes and the components of the income tax expense recognized on the Consolidated Statement of Income are as follows:

							The
(Amounts in thousands)	UK			Norway			Netherlands			U.S.			Total
Year Ended December 31, 2007
Net income (loss) before taxes	$	(68,704)	)	$	10,727		$	6,584		$	(6,864	)	$	(58,257	)
Current tax expense (benefit)		2,898			561			289			(3	)		3,745
Deferred tax expense (benefit)		(27,430	)		8,952			711			—			(17,767	)
Foreign currency losses on deferred tax liabilities		1,328			3,514			—			—			4,842
Total tax expense (benefit)		(23,204	)		13,027			1,000			(3	)		(9,180	)
Net income (loss) after taxes	$	(45,500	)	$	(2,300	)	$	5,584		$	(6,861	)	$	(49,077	)
Year Ended December 31, 2006
Net income (loss) before taxes	$	33,275		$	4,375		$	13		$	(20,588	)	$	17,075
Current tax expense		1,837			9,014			69			(45	)		10,875
Deferred tax expense		10,105			(1,840	)		—			—			8,265
Foreign currency losses on deferred tax liabilities		2,904			1,869			—			—			4,773
Total tax expense		14,846			9,043			69			(45	)		23,913
Net income (loss) after taxes	$	18,429		$	(4,668	)	$	(56	)	$	(20,543	)	$	(6,838	)
Year Ended December 31, 2005
Net income (loss) before taxes	$	(31,396	)	$	14,057		$	(17	)	$	(2,956	)	$	(20,312	)
Current tax expense		—			7,770			—			48			7,818
Deferred tax expense		—			5,067			—			—			5,067
Foreign currency losses on deferred tax liabilities		—			(1,824	)		—			—			(1,824	)
Total tax expense		—			11,013			—			48			11,061
Net income (loss) after taxes	$	(31,396	)	$	3,044		$	(17	)	$	(3,004	)	$	(31,373	)

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Endeavour International Corporation
Notes to Consolidated Financial Statements

The following table presents the principal reasons for the difference between our effective tax rates and the United States federal statutory income tax rate of 35%.

(Amounts in thousands)	Year Ended December 31,
	2007			2006			2005
Federal income tax expense (benefit) at statutory rate	$	(20,390	)	$	5,976		$	(7,109	)
Book deductions not deductible for income tax purposes		65			44			13
Taxation of foreign operations		3,969			11,935			3,309
Change in valuation allowance — US		2,337			7,280			968
Change in valuation allowance — UK		—			(6,013	)		15,983
Foreign currency (gain)/loss on deferred taxes		4,842			4,773			(1,824	)
Other		(3	)		(82	)		(279	)
Income Tax Expense	$	(9,180	)	$	23,913		$	11,061
Effective Income Tax Rate		(15	)%		140	%		(54	)%

During 2007 and 2006, we incurred taxes in all of the jurisdictions that we do business in except for the United States (U.S.). In 2007 and 2006, we had a loss before taxes of $6.9 million and $20.6 million, respectively, in the U.S. and we did not record any income tax benefits as there was no assurance that we could generate any U.S. taxable earnings, and therefore recorded a valuation allowance of the full amount of deferred tax asset generated.

During 2005, we incurred taxes primarily on our Norwegian operations as substantially all revenues and operating income were derived from Norway. Our Norwegian operations had income before taxes of $14.1 million for 2005. For other tax jurisdictions, we did not record any income tax benefits as there was no assurance that we could generate any taxable earnings, and therefore recorded valuation allowances on the full amount of deferred tax assets generated.

Deferred income taxes result from the net tax effects of temporary timing differences between the carrying amounts of assets and liabilities reflected on the financial statements and the amounts recognized for income tax purposes. The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities are as follows at December 31:

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Endeavour International Corporation
Notes to Consolidated Financial Statements

(Amounts in thousands)	2007			2006
Deferred tax asset:
Deferred compensation	$	6,887		$	5,792
Unrealized loss on derivative instruments		27,292			—
Asset retirement obligation		21,267			19,492
Net operating loss and capital loss carryforward		37,820			53,541
Uplift carryforward		2,218			3,644
Other		2,388			621
Total deferred tax assets		97,872			83,090
Less valuation allowance		(19,697	)		(17,291	)
Total deferred tax assets after valuation allowance		78,175			65,799
Deferred tax liability:
Property, plant and equipment		(176,345	)		(161,180	)
Unrealized gain on derivative instruments		—			(17,608	)
Petroleum revenue tax, net of tax benefit		(5,133	)		(6,001	)
Sale/leaseback		(754	)		(822	)
Other		(1,327	)		(678	)
Total deferred tax liabilities		(183,559	)		(186,289	)
Net deferred tax liability	$	(105,384	)	$	(120,490	)

During 2006, we recognized a deferred tax liability of approximately $98 million due to the excess of book over tax basis of the assets acquired in the Enoch and Talisman acquisitions and $3.2 million for the unitization of the Brage field.

At December 31, 2007, we had the following carryforwards available to reduce future income taxes:

(Amounts in thousands)
	Years of		Carryforward
Types of Carryforward	Expiration		Amounts
U.S. — Net operating loss		2022 – 2027	$	48,289
U.K. — Corporate Tax net operating loss	Indefinite		$	46,186
U.K. — Special Corporate Tax net operating loss	Indefinite		$	28,817
Norway — Uplift	Indefinite		$	4,434

With the exception of $48.3 million of net operating loss carryforward attributable to our U.S. operations for which a valuation allowance has been established, the remaining carryforward amounts shown above have been recognized for financial statement reporting purposes to reduce deferred tax liability.

For U.S. federal income tax purposes, certain limitations are imposed on an entity’s ability to utilize its NOLs in future periods if a change of control, as defined for federal income tax purposes, has taken place. In general terms, the limitation on utilization of NOLs and other tax attributes during any one year is determined by the value of an acquired entity at the date of the change of control multiplied by the then-existing long-term, tax-exempt interest rate. The manner of determining an acquired entity’s value has not yet been addressed by the Internal Revenue Service. We have determined that, for federal income tax

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purposes, a change of control occurred during 2004. However, we do not believe such limitations will significantly impact our ability to utilize the NOL; rather our ability to generate future taxable income will have such an impact.

Recognition of the benefits of the deferred tax assets will require that we generate future taxable income. There can be no assurance that we will generate any earnings or any specific level of earnings in future years. Therefore, we have established a valuation allowance for deferred tax assets of approximately $19.7 million, $17.3 million and $27.1 million as of December 31, 2007, 2006 and 2005, respectively. During 2007, the valuation allowance in the U.S. increased $2.4 million due to net operating losses and adjustments. During 2006, the valuation allowance decreased $6.0 million when our UK operations commenced and decreased an additional $11.1 million as a result of the deferred tax liabilities established in the purchase of Enoch and Talisman. The valuation allowance also increased $7.3 due to net operating losses in the U.S. The valuation allowance increased $16.9 million during 2005 due primarily to net operating losses.

Effective January 1, 2007, we adopted the new guidance on uncertainty in income taxes. We determined there was no cumulative effect on our financial statements relating to this adoption.

As of December, 2007, we provided for a liability of $1.7 million for unrecognized tax benefits related to various UK tax matters. Any interest and penalties that may be incurred as part of this liability would be recognized as a component of interest expense and other expense, respectively. As of December 31, 2007, no interest or penalty expenses had been recognized. Our UK tax returns currently open to audit by HM Revenue and Customs relate to the years ending December 31, 2005 through 2006.

The following represents a reconciliation of the changes in our unrecognized tax benefits, included in “Accrued Expenses and Other” on the balance sheet, for the year ended December 31, 2007:

(Amounts in thousands)
Balance at January 1, 2007	$	—
Increase in unrecognized tax benefits from current period tax positions		1,727
Balance at December 31, 2007	$	1,727

If recognized, the entire amount of the liability would not affect the effective tax rate. As of December 31, 2007, we believe that no current tax positions that have resulted in unrecognized tax benefits will significantly increase or decrease within the next year.

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Note 12 – Other Liabilities

Other liabilities included the following:

	December 31,
(Amounts in thousands)	2007		2006
Asset retirement obligations	$	38,422	$	32,503
Long-term commodity derivative liabilities		31,201		—
Other		—		7
	$	69,623	$	32,510

Our asset retirement obligations relate to obligation of the plugging and abandonment of oil and gas properties. The asset retirement obligation is recorded at fair value and accretion expense, recognized over the life of the property, increases the liability to its expected settlement value. If the fair value of the estimated asset retirement obligation changes, an adjustment is recorded for both the asset retirement obligation and the asset retirement cost. The following table provides a rollforward of the asset retirement obligations for the year ended December 31, 2007 and 2006:

	December 31,
(Amounts in thousands)	2007		2006
Carrying amount of asset retirement obligations as of beginning of year	$	32,503	$	6,740
Liabilities incurred related to acquired properties		—		25,255
Increase (decrease) due to revised estimates of asset retirement obligations		1,527		(1,489	)
Accretion expense		3,314		985
Impact of foreign currency exchange rate changes		1,078		1,012
Carrying amount of asset retirement obligations as of end of year	$	38,422	$	32,503

See Note 7 for additional discussion of commodity derivatives.

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Notes to Consolidated Financial Statements

Note 13 – Equity

The activity in shares of our common and preferred stock during 2007, 2006 and 2005 included the following:

(Amounts in thousands)	Year Ended December 31,
	2007		2006		2005
Common Stock:
Outstanding at the beginning of the year		118,577		75,489		69,995
Issuance of common stock in the offering		—		39,257		—
Issuance of common stock in the OER Acquisition		—		—		2,184
Issuance of common stock to pay preferred dividends		6,403		—		—
Exercise of warrants and stock options		—		1,655		762
Other issuances		2,026		2,176		2,548
Outstanding at the end of the year		127,006		118,577		75,489
Series B Preferred Stock:
Outstanding at the end of the year		20		20		20
Convertible Preferred Stock:
Outstanding at the beginning of the year		125		—		—
Issuances of preferred stock		—		125		—
Outstanding at the end of the year		125		125		—

Common Stock

The Common Stock is $0.001 par value common stock, 300,000,000 shares authorized.

In August 2005, we issued inducement grants of 400,000 shares of Endeavour restricted common stock and options to purchase 400,000 shares of our common stock at an exercise price of $5.02 per share, the closing sales price of our common stock as of the commencement of the employment of our executive vice president and chief financial officer. These shares of common stock and options vest one-third on each of the first three anniversary dates of the date of grant, and any options that remain unexercised on the fifth anniversary of the grant date expire. In 2007, we issued inducement grants of 800,000 shares of Endeavour restricted common stock, options to purchase 400,000 shares of our common stock at an exercise price of $2.00 per share and options to purchase 200,000 shares of our common stock at an exercise price of $1.14 per share upon commencement of employment of two executive officers.

As part of the financing for the Talisman Acquisition during the fourth quarter of 2006, we issued 37.8 million shares of common stock at $2.35 per share. After expenses, proceeds from the offering were $84 million.

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Endeavour International Corporation
Notes to Consolidated Financial Statements

Convertible Preferred Stock

As part of the financing for the Talisman Acquisition during the fourth quarter of 2006, we issued $125 million of Series A Convertible Preferred Stock to a group of private institutional investors. In December 2006, our stockholders approved the conversion of the Series A Convertible Preferred Stock into the Series C Convertible Preferred Stock (the “Convertible Preferred Stock”). The Series A Convertible Preferred Stock and the Series C Convertible Preferred Stock are substantially similar in terms, except that the Series C Convertible Preferred Stock includes a “full-ratchet” antidilution protection provision, which would result in a favorable adjustment (in the number of shares of common stock issuable on conversion and the conversion price) for the holders of Convertible Preferred Stock in the event we were to issue shares of common stock at a price below the conversion price. The Convertible Preferred Stock ranks senior to any of our other existing or future shares of capital stock.

The Convertible Preferred Stock is fully convertible into common stock at any time at the option of the preferred stock investors, at (i) a conversion price of $2.50 (the “Conversion Price”) and (ii) in an amount of common stock equal to the quotient of the liquidation preference of $1,000 per share plus accrued but unpaid dividends (the “Liquidation Preference”) divided by the Conversion Price.

Dividends are payable in cash, or common stock if we are unable to pay such dividends in cash, and any dividends will be paid to the preferred stock investors prior to payment of any other dividend on any other shares of our capital stock. We will pay a cumulative dividend on the Convertible Preferred Stock equal to 8.5% per annum of the original issue price (compounded quarterly) if paid in cash and 8.92% per annum of the original issue price (compounded quarterly) if paid in stock (the “Original Dividend Rate”). The Convertible Preferred Stock also participates on an as-converted basis with respect to any dividends paid on the common stock.

Issuance of dividends in the form of common stock are subject to the following equity conditions (the “Equity Conditions”), which are waivable by two-thirds of the holders of the Convertible Preferred Stock: (i) such common stock is listed on the American Stock Exchange, the New York Stock Exchange or the Nasdaq Stock Market, and not subject to any trading suspension; (ii) we are not then subject to any bankruptcy event; and (iii) such common stock will be immediately re-saleable by the preferred stock investors pursuant to an effective registration statement and otherwise in compliance with all applicable laws. If we have not maintained the effectiveness of the registration statement pursuant to the Registration rights section below, then the dividend rate on the Convertible Preferred Stock will be increased by the product of 2.5% (if the dividend is paid in cash) or 2.63% (if the dividend is paid in stock) times the number of quarters (or portions thereof) in which the failure occurs or we fail to cure such failure.

After the fourth anniversary of the initial issuance of the Convertible Preferred Stock, we may redeem all of the Convertible Preferred Stock in exchange for a cash payment to the preferred stock investors of an amount equal to 102% of the sum of the Liquidation Preference. If we call the Convertible Preferred Stock for redemption, the holders thereof will have the right to convert their shares into a newly issued preferred stock identical in all respects to the Convertible Preferred Stock except that such newly issued preferred stock will not bear a dividend (the “Alternate Preferred Stock”). We may not redeem the Convertible Preferred Stock if the Equity Conditions are not then satisfied with respect to the common stock into which the Alternate Preferred Stock is convertible.

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Endeavour International Corporation
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Upon the tenth anniversary of the initial issuance of the Convertible Preferred Stock, we must redeem all of the Convertible Preferred Stock for an amount equal to the Liquidation Preference plus accrued and unpaid dividends payable by us in cash or common stock at our election. Issuance by us of common stock for such redemption is subject to the Equity Conditions and to the market value of the outstanding shares of common stock immediately prior to such redemption equaling at least $500 million.

In the event of a change of control of Endeavour, we will be required to offer to redeem all of the Convertible Preferred Stock for the greater of: (i) the amount equal to which such holder would be entitled to receive had the holder converted such Convertible Preferred Stock into common stock; (ii) 115% of the sum of the Liquidation Preference plus accrued and unpaid dividends; and (iii) the amount resulting in an internal rate of return to such holder of 15% from the date of issuance of such Convertible Preferred Stock through the date that Endeavour pays the redemption price for such shares.

Series B Preferred Stock

In September 2002, we authorized and designated 500,000 shares of Preferred Stock, as Series B Preferred Stock par value $.001 per share.

The Series B Preferred Stock is to pay dividends of 8% of the original issuing price per share per annum, which are cumulative prior to any dividends on the common stock and on parity with the payment of any dividend or other distribution on any other series of preferred stock that has similar characteristics. The holders of each share of Series B Preferred Stock are entitled to be paid out of available funds prior to any distributions to holders of common stock in the amount of $100.00 per outstanding share plus all accrued dividends. We may, upon approval of our Board, redeem all or a portion of the outstanding shares of Series B preferred stock at a cost of the liquidation preference and all accrued and unpaid dividends.

Stock Warrants

We have the following outstanding warrants, all of which are currently exercisable, to purchase our common stock at December 31, 2007 and 2006:

(Amounts in thousands, except per
share data)	December 31, 2007				December 31, 2006
	Exercise
Expiration Date	Price		Shares		Exercise Price		Shares
February 2009	$	2.00		700	$	2.00		700
April 2012	$	2.00		90	$	2.00		90
				790				790

Note 14 – Stock-Based Compensation Arrangements

We grant restricted stock and stock options, including notional restricted stock and options, to employees and directors as incentive compensation. The notional restricted stock and options may be settled in cash or stock upon vesting, at our option, however it has been our practice to settle in stock. The restricted

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stock and options generally vest over three years and the options have a five year expiration. The vesting of these shares and options is dependent upon the continued service of the grantees to Endeavour. Upon the occurrence of a change in control, each share of restricted stock and stock option outstanding on the date on which the change in control occurs will immediately become vested.

The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model. Expected volatility is based on an average of our peer companies where there is a lack of relevant Endeavour volatility information for the length of the expected term. The expected term is the average of the vesting date and the expiration of the option. We use historical data to estimate option exercises and employee terminations within the valuation model. The risk-free rate for periods within the contractual life of the option is based on the U.S. treasury yield curve in effect at the time of grant. We do not include an estimated dividend yield since we have not paid dividends on our common stock historically.

The estimated fair value of each option granted was calculated using the Black-Scholes model. The following summarizes the weighted average of the assumptions used in the method.

	2007			2006			2005
							Pro forma
Risk free rate		4.4	%		4.4	%		3.8	%
Expected years until exercise		4			4			5
Expected stock volatility		45	%		38	%		71	%
Dividend yield		—			—			—

Prior to January 1, 2006, we recorded stock-based compensation under the intrinsic value method and no compensation expense was recorded for stock options granted when the exercise price of options granted was equal to or greater than the fair market value of our common stock on the date of grant. Had compensation expense for the years ended December 31, 2005 been determined under fair value provisions, our net loss and net loss per share would have been the following:

(Amounts in thousands, except per share data)	Year Ended December 31,
	2005
Net loss to common stockholders, as reported	$	(31,531	)
Add:
Stock-based compensation expense as reported, net of tax		4,091
Less:
Total stock-based compensation expense determined under fair-value-based method for all awards, net of tax		(5,676	)
Pro forma net loss	$	(33,116	)
Loss per share:
Basic and diluted – as reported	$	(0.42	)
Basic and diluted – pro forma	$	(0.44	)

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Endeavour International Corporation
Notes to Consolidated Financial Statements

At December 31, 2007, total compensation costs related to nonvested awards not yet recognized was approximately $7.1 million and is expected to be recognized over a weighted average period of less than two years. For the year ended December 31, 2007, we included approximately $1.5 million of stock-based compensation in capitalized G&A in property and equipment.

During 2003, 700,000 options were granted to then-current directors and 495,000 of these options remained outstanding at December 31, 2005. While all the options granted had an exercise price higher than the market value of the stock on the date of grant, a subsequent modification of these options by the predecessor board of directors has triggered variable accounting. We were required to record compensation expense if the modified option price is lower than the market price of the stock at the end of a reporting period until the options expire or are exercised. For the year ended December 31, 2005, we recorded non-cash general and administrative expenses of $(0.6) million related to these options. With the adoption of the revised accounting standards for share-based payments, the options are no longer being marked to the market price of the stock at the end of each reporting period.

Stock Options

Information relating to stock options, including notional stock options, is summarized as follows:

				Weighted
				Average		Weighted
				Exercise		Average		Aggregate
	Number			Price per		Contractual		Intrinsic
(Amounts in thousands, except per share and year data)	of Shares			Share		Life in Years		Value
Balance outstanding – December 31, 2006		5,404		$	3.19
Granted		745			1.78
Exercised		—			—
Forfeited		(417	)		4.53
Expired		(163	)		4.77
Balance outstanding – December 31, 2007		5,569			2.86		2.15	$	40
Currently exercisable – December 31, 2007		3,461			2.75		1.4	$	—

The weighted average grant-date fair value of options granted during 2007, 2006 and 2005 was $0.40, $1.20 and $2.71, respectively.

Of options granted during 2007, 2006 and 2005, 0.1 million, 1.0 million and 1.3 million options, respectively, were granted pursuant to incentive plans which have been approved by our stockholders. All other stock options have been granted pursuant to stock option plans that were not subject to stockholder approval.

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Endeavour International Corporation
Notes to Consolidated Financial Statements

Information relating to stock options outstanding at December 31, 2007 is summarized as follows:

(Amounts in thousands,
except per share data)	Options Outstanding						Options Exercisable
			Weighted		Weighted				Weighted
			Average		Average				Average
	Number of		Remaining		Exercise				Exercise
Range of Exercise	Options		Contractual		Price Per		Number		Price Per
Prices	Outstanding		Life		Share		Exercisable		Share
Less than $3.00		3,242		2.0	$	2.03		2,350	$	2.07
$3.00 - $3.99		990		2.8	$	3.54		217	$	3.66
Greater than $4.00		1,337		2.0	$	4.35		894	$	4.32
		5,569		2.2	$	2.86		3,461	$	2.75

Restricted Stock

At December 31, 2007, our employees and directors held 4.6 million restricted shares of our common stock that vest over the service period of up to three years. The restricted stock awards were valued based on the closing price of our common stock on the measurement date, typically the date of grant, and compensation expense is recorded on a straight-line basis over the restricted share vesting period.

Status of the restricted shares as of December 31, 2006 and the changes during the year ended December 31, 2007 are presented below:

				Weighted
				Average Grant
	Number of			Date Fair Value
(Amounts in thousands, except per share data)	Shares			per Share
Balance outstanding – December 31, 2006		4,414		$	3.76
Granted		2,624		$	1.69
Vested		(1,906	)	$	3.24
Forfeited		(580	)	$	3.93
Balance outstanding – December 31, 2007		4,552		$	2.72
Total fair value of shares vesting during the period	$	1.33

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Endeavour International Corporation
Notes to Consolidated Financial Statements

Note 15 – Supplementary Cash Flow Disclosures

Cash paid during the period for interest and income taxes was as follows:

(Amounts in thousands)	Year Ended December 31,
	2007		2006		2005
Interest paid	$	22,164	$	5,895	$	2,340
Income taxes paid	$	7,662	$	7,064	$	3,206

Non-Cash Investing and Financing Transactions

During the first quarter of 2006, we issued 1.5 million shares of our common stock in connection with the settlement of litigation.

We recorded $11.2 million, $2.0 million and $0.2 million in preferred stock dividends in 2007, 2006 and 2005, respectively. Prior to the fourth quarter of 2007, we paid outstanding dividends on the Convertible Preferred Stock through the issuance of common stock.

In 2005, we completed the OER Minority Acquisition with the aggregate consideration paid in approximately US$ 1.4 million in cash and 2,183,617 shares of our common stock.

Note 16 – Comprehensive Loss

The following summarizes the components of comprehensive loss:

(Amounts in thousands)	Year Ended December 31,
	2007			2006			2005
Net loss	$	(49,077	)	$	(6,838	)	$	(31,373	)
Related to derivative instruments:
Unrealized loss		(852	)		(1,012	)		(5,672	)
Reclassification adjustment for loss realized in net loss above		—			4,702			1,982
Related to marketable securities:
Unrealized loss		(71	)		(887	)		(360	)
Reclassification adjustment for loss realized in net loss above		—			1,775			—
Unrealized gain (loss), net		(923	)		4,578			(4,050	)
Comprehensive loss	$	(50,000	)	$	(2,260	)	$	(35,423	)

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The components of accumulated other comprehensive income are:

(Amounts in thousands)	December 31,
	2007			2006			2005
Related to derivative instruments:
Balance at beginning of year	$	—		$	(3,690	)	$	—
Change during the year		(852	)		3,690			(3,690	)
Balance at end of year		(852	)		—			(3,690	)
Related to marketable securities:
Balance at beginning of year		—			(888	)		(528	)
Change during the year		(71	)		888			(360	)
Balance at end of year		(71	)		—			(888	)
Accumulated comprehensive loss	$	(923	)	$	—		$	(4,578	)

Note 17 – Commitments and Contingencies

General

The oil and gas industry is subject to regulation by federal, state and local authorities. In particular, oil and gas production operations and economics are affected by environmental protection statutes, tax statutes and other laws and regulations relating to the petroleum industry. We believe we are in compliance with all federal, state and local laws, regulations applicable to Endeavour and its properties and operations, the violation of which would have a material adverse effect on us or our financial condition.

Rig Commitments

In 2006, we joined with several other operators in the Norwegian Continental Shelf to form a consortium that has entered into a contract for the use of a drilling rig for a three-year period beginning the second half of 2006. The agreement allows us to move forward with our exploration program in Norway and fulfill our role as an operator of Norwegian licenses. The contract commits us to 100 days (for two wells) of drilling services for approximately $38 million between mid 2008 and 2009.

In the second quarter of 2006, we entered into a rig commitment for 220 days for the United Kingdom sector of the North Sea. The initial obligation under this contract was $66 million. In January 2007, a $22 million escrow payment was made under the rig commitment. During 2007, we utilized 73 days of this rig commitment and expect to utilize the remaining 147 days of this commitment beginning in the third quarter of 2008 through 2009 depending on well scheduling.

The escrow accounts for turnkey drilling contracts represent required collateral under active drilling operations. Escrow accounts are relieved as drilling progresses and payments are made under the drilling

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contracts. At December 31, 2007 and 2006, we have $22.0 million and $1.9 million held in escrow related to drilling accounts reflected in restricted cash.

Contingencies

Hess Limited, the operator of the AH001 facility, supporting production from Ivanhoe, Rob Roy, Hamish (collectively, IVRRH), Renee and Rubie fields has advised us that there has been a mis-measurement of the volumes of oil produced from the IVRRH fields. At December 31, 2007, we are estimating a net liability of $2.8 million as a result of the mis-measurement.

Operating Leases

We have leases for office space and equipment with lease payments of $1.8 million, $1.7 million and $1.7 million for the years ended December 31, 2008, 2009 and 2010, respectively.

Note 18 – Segment and Geographic Information

We have determined we have one reportable operating segment being the acquisition, exploration and development of oil and gas properties. Our operations are conducted in geographic areas as follows:

(Amounts in thousands)	2007				2006				2005
			Long-lived				Long-lived				Long-lived
	Revenue		Assets		Revenue		Assets		Revenue		Assets
United States	$	—	$	6,920	$	—	$	33,120	$	—	$	11,298
United Kingdom		135,876		527,810		24,881		537,936		—		16,381
Norway		40,188		90,260		29,250		72,957		38,656		68,620
The Netherlands		—		4,278		—		1,799		—		1,594
Ireland		—		108		—		90		—		—
Total International		176,064		622,456		54,131		612,782		38,656		86,595
Total	$	176,064	$	629,376	$	54,131	$	645,902	$	38,656	$	97,893

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Endeavour International Corporation
Notes to Consolidated Financial Statements

Note 19 – Quarterly Financial Data (Unaudited)

(Amounts in thousands, except per share data)
				Second			Third			Fourth
	First Quarter			Quarter			Quarter			Quarter
					2007
Revenues	$	42,790		$	31,621		$	47,169		$	54,484
Operating expenses		35,291			30,135			35,370			36,977
Operating profit		7,499			1,486			11,799			17,507
Net loss to common stockholders		(5,987	)		(13,048	)		(11,681	)		(29,598	)
Net loss per common share – basic		(0.05	)		(0.11	)		(0.09	)		(0.23	)
Net loss per common share – diluted		(0.05	)		(0.11	)		(0.09	)		(0.23	)
					2006
Revenues	$	8,476		$	7,645		$	6,726		$	31,284
Operating expenses		10,741			10,540			11,377			25,847
Operating loss		(2,265	)		(2,895	)		(4,651	)		5,437
Net income (loss) to common stockholders		(6,938	)		(10,389	)		15,225			(6,727	)
Net income (loss) per common share – basic		(0.09	)		(0.13	)		0.19			(0.06	)
Net income (loss) per common share – diluted		(0.09	)		(0.13	)		0.17			(0.06	)

Note 20 — Supplemental Oil and Gas Disclosures — Unaudited

Capitalized Costs Relating to Oil and Gas Producing Activities
	United								The
(Amounts in thousands)	Kingdom			Norway			Ireland		Netherlands		Total
December 31, 2007:
Proved	$	216,572		$	53,729		$	—	$	—	$	270,301
Unproved		154,948			28,869			108		2,068		185,993
Total capitalized costs		371,520			82,598			108		2,068		456,294
Accumulated depreciation, depletion and amortization		(102,386	)		(20,461	)		—		—		(122,847	)
Net capitalized costs	$	269,134		$	62,137		$	108		2,068	$	333,447
December 31, 2006:
Proved	$	156,441		$	34,228		$	—	$	—	$	190,669
Unproved		151,794			23,949			90		1,799		177,632
Total capitalized costs		308,235			58,177			90		1,799		368,301
Accumulated depreciation, depletion and amortization		(37,812	)		(13,288	)		—		—		(51,100	)
Net capitalized costs	$	270,423		$	44,889		$	90	$	1,799	$	317,201

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Endeavour International Corporation
Notes to Consolidated Financial Statements

Costs Incurred in Oil and Gas Property Acquisition, Exploration and Development Activities
	United							The
(Amounts in thousands)	Kingdom		Norway			Ireland		Netherlands		Total
Year Ended December 31, 2007:
Acquisition costs:
Proved	$	—	$	—		$	—	$	—	$	—
Unproved		774		—			18		—		792
Exploration costs		54,916		10,392			—		268		65,576
Development costs		7,562		14,063			—		—		21,625
Total costs incurred	$	63,252	$	24,455		$	18	$	268	$	87,993
Year Ended December 31, 2006:
Acquisition costs:
Proved	$	139,456	$	—		$	—	$		$	139,456
Unproved		81,715		—			—		—		81,715
Exploration costs		35,002		5,089			90		205		40,386
Development costs		8,960		7,235			—		—		16,195
Total costs incurred	$	265,133	$	12,324		$	90	$	205	$	277,752
Year Ended December 31, 2005:
Acquisition costs:
Proved	$	—	$	(2,151	)	$	—	$	—	$	(2,151	)
Unproved		—		(503	)		—		—		(503	)
Exploration costs		34,332		7,626			—		1,446		43,404
Development costs		—		3,277			—		—		3,277
Total costs incurred	$	34,332	$	8,249		$	—	$	1,446	$	44,027

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Notes to Consolidated Financial Statements

Results of Operations for Oil and Gas Producing Activities
	United					The
(Amounts in thousands)	Kingdom			Norway		Netherlands		Total
Year Ended December 31, 2007:
Revenues	$	135,876		$	40,188	$	—	$	176,064
Production expenses		27,263			13,781		—		41,044
DD&A		67,338			7,722		—		75,060
Income tax expense		20,638			14,574		—		35,212
Results of activities	$	20,637		$	4,111	$	—	$	24,748
Year Ended December 31, 2006:
Revenues	$	24,881		$	29,250	$	—	$	54,131
Production expenses		4,477			11,091		—		15,568
DD&A		10,292			6,217		—		16,509
Impairment of oil and gas properties		849			—		—		849
Income tax expense		4,631			9,315		—		13,946
Results of activities	$	4,632		$	2,627	$	—	$	7,259
Year Ended December 31, 2005:
Revenues	$	—		$	38,656	$	—	$	38,656
Production expenses		—			11,990		—		11,990
DD&A		—			7,377		—		7,377
Impairment of oil and gas properties		27,116			—		—		27,116
Income tax expense		—			15,046		—		15,046
Results of activities	$	(27,116	)	$	4,243	$	—	$	(22,873	)

Oil and Gas Reserves

Proved reserves are estimated quantities of oil, gas and natural gas liquids that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Proved developed reserves are proved reserves that can reasonably be expected to be recovered through existing wells with existing equipment and operating methods. The reserve volumes presented are estimates only and should not be construed as being exact quantities. These reserves may or may not be recovered and may increase or decrease as a result of our future operations and changes in economic conditions. Our oil and gas reserves were prepared by independent reserve engineers at December 31, 2007 and 2006. Prior to 2006, our oil and gas reserves were audited by independent reserve engineers.

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Notes to Consolidated Financial Statements

	United
Proved Oil Reserves (MBbls):	Kingdom			Norway			Total
Proved reserves at January 1, 2005		—			1,543			1,543
Production		—			(726	)		(726	)
Revisions of previous estimates		—			347			347
Proved reserves at December 31, 2005		—			1,543			1,543
Purchase of proved reserves, in place		4,593			—			4,593
Production		(210	)		(508	)		(718	)
Revisions of previous estimates		183			530			713
Proved reserves at December 31, 2006		4,566			1,186			5,752
Production		(1,274	)		(519	)		(1,793	)
Extensions and discoveries		—			340			340
Revisions of previous estimates		(8	)		1,049			1,041
Proved reserves at December 31, 2007		3,284			2,056			5,340
Proved Developed Oil Reserves (MBbls):
At December 31, 2005		—			816			816
At December 31, 2006		3,400			737			4,137
At December 31, 2007		2,544			1,650			4,194

	United
Proved Gas Reserves (MMcf):	Kingdom			Norway			Total
Proved reserves at January 1, 2005		—			6,725			6,725
Production		—			(184	)		(184	)
Revisions of previous estimates		—			(244	)		(244	)
Proved reserves at December 31, 2004		—			6,297			6,297
Purchase of proved reserves, in place		14,574			—			14,574
Production		(1,539	)		(203	)		(1,742	)
Revisions of previous estimates		4,137			1,579			5,716
Proved reserves at December 31, 2006		17,172			7,673			24,845
Production		(8,556	)		(328	)		(8,884	)
Extensions and discoveries		—			1,821			1,821
Revisions of previous estimates		3,196			(732	)		2,464
Proved reserves at December 31, 2007		11,812			8,434			20,246

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Endeavour International Corporation
Notes to Consolidated Financial Statements

	United
Proved Gas Reserves (MMcf):	Kingdom		Norway		Total
Proved Developed Gas Reserves (MMcf):
At December 31, 2005		—		33		33
At December 31, 2006		13,184		—		13,184
At December 31, 2007		8,416		6,614		15,030

	United
Proved Reserves (MBOE):	Kingdom			Norway			Total
Proved reserves at January 1, 2005		—			2,664			2,664
Production		—			(756	)		(756	)
Revisions of previous estimates		—			306			306
Proved reserves at December 31, 2005		—			2,214			2,214
Purchase of proved reserves, in place		7,022			—			7,022
Production		(466	)		(542	)		(1,008	)
Revisions of previous estimates		872			793			1,665
Proved reserves at December 31, 2006		7,428			2,465			9,893
Production		(2,700	)		(574	)		(3,274	)
Extensions and discoveries		—			643			643
Revisions of previous estimates		524			927			1,451
Proved reserves at December 31, 2007		5,252			3,461			8,713
Proved Developed Reserves (MBOE):
At December 31, 2005		—			822			822
At December 31, 2006		5,597			737			6,334
At December 31, 2007		3,947			2,752			6,699

During the year ended December 31, 2006, we purchased 7,022 MBOE in the Enoch field and Talisman Acquisitions.

Standardized Measure of Discounted Future Net Cash Flows

Future cash inflows and future production and development costs are determined by applying year-end prices and costs to the estimated quantities of oil and gas to be produced. Estimated future income taxes are computed using current statutory income tax rates for where production occurs. The resulting future net cash flows are reduced to present value amounts by applying a 10% annual discount factor.

Estimates of future cash inflows are based on prices at year-end. Oil, gas and condensate prices are escalated only for fixed and determinable amounts under provisions in some contracts. At December 31, 2007 and 2006, the prices used to determine the estimates of future cash inflows were $96.02 and $58.93 per barrel, respectively, for oil and $10.03 and $4.71 per Mcf, respectively, for gas. Estimated future cash

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Notes to Consolidated Financial Statements

inflows are reduced by estimated future development, production, abandonment and dismantlement costs based on year-end cost levels, assuming continuation of existing economic conditions, and by estimated future income tax expense. Income tax expense, both U.S. and foreign, is calculated by applying the existing statutory tax rates, including any known future changes, to the pretax net cash flows giving effect to any permanent differences and reduced by the applicable tax basis. The effect of tax credits is considered in determining the income tax expense.

The standardized measure of discounted future net cash flows is not intended to present the fair market value of our oil and gas reserves. An estimate of fair value would also take into account, among other things, the recovery of reserves in excess of proved reserves, anticipated future changes in prices and costs, an allowance for return on investment and the risks inherent in reserve estimates.

Under the full cost method of accounting, a noncash charge to earnings related to the carrying value of our oil and gas properties on a country-by-country basis may be required when prices are low. Whether we will be required to take such a charge depends on the prices for crude oil and natural gas at the end of any quarter, as well as the effect of both capital expenditures and changes to proved reserves during that quarter. Given the volatility of natural gas and oil prices, it is reasonably possible that our estimate of discounted future net cash flows from proved oil and gas reserves will change in the near term. If a noncash charge were required, it would reduce earnings for the period and result in lower DD&A expense in future periods.

Standardized Measure of Discounted Future Net Cash Flows
(Amounts in thousands)	United Kingdom			Norway			Total
December 31, 2007:
Future cash inflows	$	423,911		$	256,455		$	680,366
Future production costs		(99,544	)		(55,968	)		(155,512	)
Future development costs		(62,119	)		(26,672	)		(88,791	)
Future income tax expense		(109,399	)		(125,013	)		(234,412	)
Future net cash flows (undiscounted)		152,849			48,802			201,651
Annual discount of 10% for estimated timing		1,328			8,403			9,731
Standardized measure of future net cash flows	$	151,521		$	40,399		$	191,920
December 31, 2006:
Future cash inflows	$	354,827		$	103,471		$	458,298
Future production costs		(74,798	)		(57,712	)		(132,510	)
Future development costs		(39,445	)		(22,098	)		(61,543	)
Future income tax expense		(99,855	)		(9,838	)		(109,693	)
Future net cash flows (undiscounted)		140,729			13,823			154,552
Annual discount of 10% for estimated timing		6,372			2,639			9,011
Standardized measure of future net cash flows	$	134,357		$	11,184		$	145,541

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Endeavour International Corporation
Notes to Consolidated Financial Statements

Principal Sources of Change in the Standardized Measure of Discounted Future Net Cash Flows
(Amounts in thousands)	Year Ended December 31,
	2007			2006			2005
Standardized measure, beginning of period	$	145,541		$	18,525		$	10,265
Net changes in prices and production costs		199,343			(25,622	)		44,166
Future development costs		21,625			16,195			3,277
Revisions of previous quantity estimates		79,636			47,154			9,502
Extensions and discoveries		35,345
Accretion of discount		24,078			6,037			1,963
Changes in income taxes, net		(135,233	)		20,393			(26,876	)
Sale of oil and gas produced, net of production costs		(135,020	)		(38,592	)		(26,667	)
Purchased reserves		—			101,533			—
Change in estimated future development costs, production, timing and other		(43,395	)		(82	)		2,895
Standardized measure, end of period	$	191,920		$	145,541		$	18,525

Note 21 – Subsequent Events

On January 22, 2008, we completed the refinancing of certain debt with the following:

• Repayment of the outstanding balance of $75 million under our second lien term loan, plus accrued interest;

• Issuance of $40 million under a private offering of 11.5% guaranteed convertible bonds to a company controlled by the Smedvig Family Office of Norway; and

• Issuance of $25 million under a junior credit facility.

11.5% Guaranteed Convertible Bonds

The $40 million 11.5% guaranteed convertible bonds due 2014 bear interest at a rate of 11.5% per annum, compounded quarterly, and are unconditionally guarantee by us on a senior unsecured basis. The bonds are convertible into shares of our common stock at an initial conversion price of $2.36 per $1,000 of principal. The conversion price will be reduced in accordance with the terms of the bonds upon occurrence of certain events, including payment of common stock dividends, common stock splits or issuance of common stock at a price below the current market price.

We are required to register the shares of common stock issuable upon conversion of the bonds with the Securities and Exchange Commission. If we do not comply with the required registration rights, the bonds will bear an increased interest rate.

If we undergo a “change of control” as defined, the holders of the bonds have the right, subject to certain conditions, to redeem the bonds and accrued interest. The bonds may become immediately due upon the occurrence of certain events of default, as defined.

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Notes to Consolidated Financial Statements

Junior Facility

We also borrowed $25 million under a Junior Facility Agreement (the “Junior Facility”), dated January 22, 2008. Indebtedness under the Junior Facility will bear interest at LIBOR plus 3.5% (5.5% after the first year). Amounts borrowed under the Junior Facility will be repaid in semi-annual payments beginning December 31, 2009 and must be repaid in full on October 11, 2011.

Outstanding loans may be prepaid at our option without penalty after the earlier of (i) the day after the period extending from January 22, 2008 to and including one month after the Effective Date (as defined in the Junior Facility) or (ii) the day on which the lenders’ available commitments are reduced to zero. Once repaid, amounts under the Junior Facility may not be re-borrowed. The Junior Facility contains customary covenants, which limit our ability to incur indebtedness, except for permitted hedging arrangements; create certain liens; dispose of our assets and make dividend or other distribution with respect to equity securities. In addition, the Junior Facility contains various financial and technical covenants.

The amounts outstanding under the Junior Facility may become immediately due upon the occurrence of a change of control, failure to pay obligations under other financial indebtedness when due, certain events of default, breach of financial covenants and other events as defined in the agreement.

Second lien term loan repayment

Simultaneously with entering into the Junior Facility, discussed above, we terminated the Second Lien Credit Agreement and repaid all of the $78.6 million in outstanding indebtedness including accrued interest, related fees and expenses of approximately $3.6 million. The amount outstanding under the Second Lien Credit Agreement was scheduled to mature in 2011. For additional information regarding the Second Lien Credit Agreement, see Note 10 “Debt and Notes Payable.”

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Endeavour International Corporation

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our chief executive officer, chief financial officer and chief accounting officer, we evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report, December 31, 2007. Based on that evaluation, our chief executive officer, chief financial officer and chief accounting officer concluded that our disclosure controls and procedures are effective to ensure that information we are required to disclose in our reports filed or submitted under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosures.

Management’s Report on Internal Control Over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal controls over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as amended. Our internal controls were designed to provide reasonable assurance as to the reliability of our financial reporting and the preparation and presentation of the consolidated financial statements for external purposes in accordance with accounting principles generally accepted in the United States.

Because of its inherent limitations, internal control over financial reporting may not detect or prevent misstatements. Projections of any evaluation of the effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2007. In making this assessment, our management used the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our assessment, our internal control over financial reporting was effective as of December 31, 2007.

KPMG LLP, an independent registered public accounting firm, audited management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2007 and issued their attestation report set forth on the following page.

Changes in Internal Control over Financial Reporting

There were no changes in our internal controls over financial reporting during the quarterly period ended December 31, 2007 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Endeavour International Corporation

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
Endeavour International Corporation:

We have audited Endeavour International Corporation’s internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Endeavour International Corporation’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Endeavour International Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Endeavour International Corporation and subsidiaries as of December 31, 2007 and 2006, and the related consolidated statements of operations, stockholders’ equity and comprehensive income, and cash flows for each of the years in the three-year

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period ended December 31, 2007, and our report dated March 14, 2008 expressed an unqualified opinion on those consolidated financial statements.

KPMG LLP

Houston, Texas
March 14, 2008

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Endeavour International Corporation

Item 9B. Other Information

None.

Part III

Item 10. Directors, Executive Officers and Corporate Governance of the Registrant

Our Definitive Proxy Statement for our 2008 Annual Meeting of Stockholders, when filed pursuant to Regulation 14A under the Securities Exchange Act of 1934, will be incorporated by reference into this annual report on Form 10-K pursuant to General Instruction G(3) of Form 10-K and will provide the information required under Part III, Item 10. In addition, see “Business – Executive Officers” in Item 1 of this
Form 10-K.

Item 11. Executive Compensation

Our Definitive Proxy Statement for our 2008 Annual Meeting of Stockholders, when filed pursuant to Regulation 14A under the Securities Exchange Act of 1934, will be incorporated by reference into this annual report on Form 10-K pursuant to General Instruction G(3) of Form 10-K and will provide the information required under Part III, Item 11.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters

Our Definitive Proxy Statement for our 2008 Annual Meeting of Stockholders, when filed pursuant to Regulation 14A under the Securities Exchange Act of 1934, will be incorporated by reference into this annual report on Form 10-K pursuant to General Instruction G(3) of Form 10-K and will provide the information required under Part III, Item 12.

Item 13. Certain Relationships and Related Transactions, and Director Independence

Our Definitive Proxy Statement for our 2008 Annual Meeting of Stockholders, when filed pursuant to Regulation 14A under the Securities Exchange Act of 1934, will be incorporated by reference into this annual report on Form 10-K pursuant to General Instruction G(3) of Form 10-K and will provide the information required under Part III, Item 13.

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Endeavour International Corporation

Item 14. Principal Accounting Fees and Services

Our Definitive Proxy Statement for our 2008 Annual Meeting of Stockholders, when filed pursuant to Regulation 14A under the Securities Exchange Act of 1934, will be incorporated by reference into this annual report on Form 10-K pursuant to General Instruction G(3) of Form 10-K and will provide the information required under Part III, Item 14.

Part IV

Item 15. Exhibits and Financial Statement Schedules

(a) (1) and (2) Financial Statements and Financial Statement Schedules.

See our consolidated financial statements included in Item 8 above.

(a) (3) Exhibits.

See “Index of Exhibits” below which lists the documents filed as exhibits with this Form 10-K.

(b) Exhibits.

See “Index of Exhibits” below which lists the documents filed as exhibits with this Form 10-K.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Endeavour International Corporation

By:	/s/ J. Michael Kirksey
	J. Michael Kirksey
	Executive Vice President and Chief Financial Officer

Date: March 14, 2008

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ William L. Transier	Chief Executive Officer, President	March 14, 2008
William L. Transier	and Director (Principal Executive Officer)
/s/ J. Michael Kirksey	Chief Financial Officer (Principal	March 14, 2008
J. Michael Kirksey	Financial Officer)
/s/ Robert L. Thompson	Chief Accounting Officer	March 14, 2008
Robert L. Thompson	(Principal Accounting Officer)
/s/ Thomas D. Clark	Director	March 14, 2008
Thomas D. Clark
/s/ John B. Connally III	Director	March 14, 2008
John B. Connally III
/s/ Barry J. Galt	Director	March 14, 2008
Barry J. Galt
/s/ Charles Hue Williams	Director	March 14, 2008
Charles Hue Williams
/s/ Nancy K. Quinn	Director	March 14, 2008
Nancy K. Quinn
/s/ John N. Seitz	Director	March 14, 2008
John N. Seitz

97

Index to Exhibits

Exhibit	Description
3.1(a)	Amended and Restated Articles of Incorporation (Incorporated by reference to Exhibit 3.2 of our Quarterly Report on Form 10-Q (Commission File No. 001-32212) for the quarter ended June 30, 2004)
3.1(b)	Certificate of Amendment dated June 1, 2006 (Incorporated by reference to Exhibit 4.2 of our Registration Statement on Form S-3 (Commission File No. 333-139304) filed on December 13, 2006)
3.2(a)	Amended and Restated Bylaws (Incorporated by reference to Exhibit 3.4 to our Current Report on Form 8-K (Commission File No. 001-32212) filed on November 6, 2006.)
3.2(b)	Amendment to Amended and Restated By-laws dated December 12, 2007 by Endeavour International Corporation (Incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K (Commission File No. 001-32212) on December 12, 2007.)
3.3	Amended and Restated Certificate of Designation of Series B Preferred Stock filed February 26, 2004 (Incorporated by reference to Exhibit 3.3 of our Quarterly Report on Form 10-Q (Commission File No. 001-32212) for the quarter ended June 30, 2004.)
3.4	Specimen of Common Stock Certificate (Incorporated by reference to Exhibit 3.7 of our Quarterly Report on Form 10-Q (Commission File No. 001-32212) for the quarter ended June 30, 2004.)
3.5	Certificate of Designation of Series A Preferred Stock of Endeavour International Corporation (Incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K (Commission File No. 001-32212) filed on November 6, 2006.)
3.6	Certificate of Designation of Series C Preferred Stock of Endeavour International Corporation (Incorporated by reference to Exhibit 3.2 to our Current Report on Form 8-K (Commission File No. 001-32212) filed on November 6, 2006.)
3.7	Certificate of Designation of Series D Preferred Stock of Endeavour International Corporation (Incorporated by reference to Exhibit 3.3 to our Current Report on Form 8-K (Commission File No. 001-32212) filed on November 6, 2006.)
4.1 (a)	Warrants to Purchase Common Stock issued to Trident Growth Fund, LP dated July 29, 2003 (warrant # 2003-3) (Incorporated by reference to Exhibit 4.7 of our Annual Report on Form 10-KSB (Commission File No. 000-33439) for the year ended December 31, 2003)
4.1 (b)	First Amendment to Warrants to Purchase Common Stock dated February 26, 2004 (warrant # 2003-3) (Incorporated by reference to Exhibit 4.7 of our Annual Report on Form 10-KSB (Commission File No. 000-33439) for the year ended December 31, 2003)
4.2	Warrant to Purchase 25,000 Shares of Common Stock issued to Trident Growth Fund, L.P. (Incorporated by reference to Exhibit 10.11 of our Annual Report on Form 10-KSB (Commission File No. 000-33439) for the Year Ended December 31, 2002).

*	Filed herewith.
†	Identifies management contracts and compensatory plans or arrangements.

Index to Exhibits

Exhibit	Description
4.3	Indenture, dated as of January 20, 2005, between Endeavour International Corporation and Wells Fargo Bank, National Association, as Trustee, relating to the 6.00% Convertible Senior Notes due 2012 (Incorporated by reference to our Exhibit 4.1 to our Current Report on Form 8-K (Commission File No. 001-32212) filed on January 24, 2005.)
4.4	Registration Rights Agreement dated January 24, 2008 by and between Endeavour International Corporation and Smedvig QIF Plc (Incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K (Commission File No. 001-32212) on January 24, 2008.)
4.5	Trust Deed dated January 24, 2008 by and among Endeavour International Corporation, Endeavour Energy Luxembourg S.a.r.l. and BNY Corporate Trustee Services Limited, as trustee (Incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K (Commission File No. 001-32212) on January 24, 2008.)
10.1	Form of Amended and Restated Option to Purchase 100,000 Shares of Common Stock dated August 8, 2003, between Endeavour 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.)
10.2 (b)	Amendment to Option to Purchase Common Stock dated February 26, 2004 between Endeavour and Joseph M. Fioravanti (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	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 Endeavour’s common stock. (Incorporated by reference to Exhibit 10.24 of our Annual Report on Form 10-KSB (Commission File No. 000-33439) for the year ended December 31, 2003)
†10.5	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)
†10.6(a)	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)

*	Filed herewith.
†	Identifies management contracts and compensatory plans or arrangements.

Index to Exhibits

Exhibit	Description
†10.6(b)	Amendment to employment agreement dated October 9, 2006 by and between Endeavour International Corporation and William L. Transier 2005 (Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K (Commission File No. 001-32212) filed on October 10, 2006.)
†10.7	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)
†10.8	Form of Restricted Stock Award Agreement. (Incorporated by reference to Exhibit 10.39 of our Annual Report on Form 10-KSB (Commission File No. 000-33439) for the year ended December 31, 2003)
†10.9	Form of Nonstatutory Stock Option Agreement between Endeavour International Corporation and William L. Transier, John N. Seitz, Michael D. Cochran, Bruce H. Stover, H. Don Teague and Robert L. Thompson, individually (Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K (Commission File No. 001-32212) on January 5, 2005.)
†10.10	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.)
†10.11	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.)
†10.12	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.)
†10.13	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.)
†10.14	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.)
10.15	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.)

*	Filed herewith.
†	Identifies management contracts and compensatory plans or arrangements.

Index to Exhibits

Exhibit	Description
10.16	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.)
10.17	Put and Call Option Agreement between Paladin Resources Limited, Endeavour Energy UK Limited and Endeavour International Corporation, dated May 26, 2006 (Incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K (Commission File No. 001-32212) on June 2, 2006.)
10.18	Hive-In Agreement between Talisman Energy (UK) Limited, Talisman Energy Alpha Limited, Talisman North Sea Limited, Talisman Oil Trading Limited and Talisman Expro Limited, dated May 26, 2006. (Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K (Commission File No. 001-32212) on June 2, 2006.)
10.19	Hive-Out Agreement between Talisman Expro Limited and Paladin Resources (Montrose) Limited, dated May 26, 2006 (Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K (Commission File No. 001-32212) on June 2, 2006.)
10.20	Hive-Out Agreement between Talisman Expro Limited and Talisman Petroleum Ltd., dated May 26, 2006 (Incorporated by reference to Exhibit 10.3 to our Current Report on Form 8-K (Commission File No. 001-32212) on June 2, 2006.)
10.21	Hive-Out Agreement between Talisman Expro Limited and Talisman Oil Trading Limited, dated May 26, 2006 (Incorporated by reference to Exhibit 10.4 to our Current Report on Form 8-K (Commission File No. 001-32212) on June 2, 2006.)
10.22	Hive-Out Agreement between Talisman Expro Limited and Talisman North Sea Limited, dated May 26, 2006 (Incorporated by reference to Exhibit 10.5 to our Current Report on Form 8-K (Commission File No. 001-32212) on June 2, 2006.)
10.23	Hive-Out Agreement between Talisman Expro Limited and Talisman Energy (UK) Limited, dated May 26, 2006 (Incorporated by reference to Exhibit 10.6 to our Current Report on Form 8-K (Commission File No. 001-32212) on June 2, 2006.)
10.24	Underwriting Agreement, dated October 19, 2006, by and among Endeavour International Corporation and J.P. Morgan Securities Inc. and Credit Suisse Securities (USA) LLC, as representatives of the several underwriters named in Schedule I thereto 2006 (Incorporated by reference to Exhibit 1.1 to our Current Report on Form 8-K (Commission File No. 001-32212) on October 25, 2006.)
10.25	Subscription and Registration Rights Agreement, dated October 19, 2006, by and among Endeavour International Corporation and the Investors party thereto (Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K (Commission File No. 001-32212) on October 25, 2006.)
10.26	Consulting agreement dated October 9, 2006 by and between Endeavour International Corporation and John N. Seitz (Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K (Commission File No. 001-32212) on October 10, 2006.)
10.27	Termination agreement dated November 29, 2007 by and between Endeavour International Corporation and John Seitz (Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K (Commission File No. 001-32212) on November 29, 2007.)

*	Filed herewith.
†	Identifies management contracts and compensatory plans or arrangements.

Index to Exhibits

Exhibit	Description
10.28 (a)	$225,000,000 Secured Revolving Loan and Letter of Credit Facility Agreement (Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K (Commission File No. 001-32212) filed on November 6, 2006.)
10.28 (b)	Waiver and consent to $225,000,000 Secured Revolving Loan and Letter of Credit Facility Agreement (Incorporated by reference to Exhibit 4.8(b) to our Annual Report on Form 10-K (Commission File No. 001-32212) for the year ended December 31, 2006).
10.29 (a)	Second Lien Credit and Guarantee Agreement (Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K/A (Commission File No. 001-32212) filed on November 7, 2006.)
10.29 (b)	Amendment to Second Lien Credit and Guarantee Agreement (Incorporated by reference to Exhibit 4.9(b) to our Annual Report on Form 10-K (Commission File No. 001-32212) for the year ended December 31, 2006).
10.30	Junior Facility Agreement dated January 22, 2008 by and among Endeavour International Holding B.V., as borrower, Endeavour International Corporation and certain of its affiliates party thereto, as guarantors, BNP Paribas and Bank of Scotland Plc, as the mandated lead arrangers and original lenders, and BNP Paribas, as agent and security trustee. (Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K (Commission File No. 001-32212) on January 24, 2008.)
10.31*	Restricted Stock Award Agreement between Endeavour International Corporation and J. Michael Kirksey dated September 26, 2007.
10.32*	Restricted Stock Award Agreement between Endeavour International Corporation and John G. Williams dated October 1, 2007.
10.33*	Stock Option Agreement between Endeavour International Corporation and J. Michael Kirksey dated September 26, 2007.
10.34*	Stock Option Agreement between Endeavour International Corporation and John G. Williams dated October 1, 2007.
*14.1	Code of Business Conduct of Endeavour International Corporation.
*21.1	List of Subsidiaries.
*23.1	Consent of Independent Registered Public Accounting Firm – KPMG LLP.
*23.2	Consent of Independent Reserve Engineers – Netherland, Sewell & Associates, Inc.
*31.1	Certification of William L. Transier, Chief Executive Officer, pursuant to Rule 13a-14(a) of the Securities and Exchange Act of 1934, as amended.
*31.2	Certification of J. Michael Kirksey, Chief Financial Officer, pursuant to Rule 13a-14(a) of the Securities and Exchange Act of 1934, as amended.
*31.3	Certification 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, Chief Executive 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.

Index to Exhibits

Exhibit	Description
*32.2	Certification of J. Michael Kirksey, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
*32.3	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.

EX-10.31

Exhibit 10.31

ENDEAVOUR INTERNATIONAL CORPORATION
RESTRICTED STOCK AWARD AGREEMENT

     THIS RESTRICTED STOCK AGREEMENT (this “Agreement”) is made and entered into by and between Endeavour International Corporation (the “Company”) and J. Michael Kirksey, an employee of the Company (“Grantee”), dated as of September 26, 2007 but effective as of the grant date(s) shown in Appendix A attached hereto.

     WHEREAS, effective J. Michael Kirksey Grantee shall be an employee of the Company and as an inducement for such employment and in connection with Grantee providing services to the Company as an employee, the Compensation Committee of the Board of Directors of the Company, on behalf of the Company, desires to grant to Grantee a number of restricted shares of the Company’s common stock, par value $.001 per share (the “Common Stock”), subject to the terms and conditions of this Agreement, with a view to increasing Grantee’s interest in the Company’s welfare and growth.

     NOW, THEREFORE, in consideration of the premises, mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:

     1. Grant of Common Stock. Subject to the restrictions, forfeiture provisions and other terms and conditions set forth herein (a) the Company hereby grants to Grantee the number of shares of Common Stock (“Restricted Shares”) as set out in Appendix A hereto, and (b) subject to the terms hereof, Grantee shall have and may exercise rights and privileges of ownership of such Restricted Shares, including, without limitation, the voting rights of such shares and the right to receive dividends declared in respect thereof. This Agreement and the grant of Restricted Shares are subject to administration by and the rules and procedures established by the Board of Directors of the Company (the “Board”) or a committee appointed by the Board to administer this Agreement (the “Committee”) and the Board or the Committee, if so appointed, shall have the authority to construe and interpret the terms of this Agreement and to provide omitted terms to carry out this Agreement. Except with respect to Section 3(v), any authority provided to the Company, the Board or Committee herein shall also be provided to the Committee, if one is appointed by the Board. The Committee shall have the authority to take all actions that it deems advisable for the administration of this Agreement.

     2. Transfer Restrictions; Vesting.

     (a) Generally. Grantee shall not sell, assign, transfer, exchange, pledge, encumber, gift, devise, hypothecate or otherwise dispose of (collectively, “Transfer”) any Restricted Shares prior to their vesting in accordance with the Vesting Schedule set out in Appendix A. Further, even after such Restricted Shares become vested, such vested Restricted Shares may not be sold or otherwise disposed of in any manner which would constitute a violation of any applicable federal or state securities or other applicable law or Company policies as determined by Company on advice of counsel chosen by the Company in its sole discretion. Restricted

Shares shall vest as of each of the Vesting Dates set out in Appendix A provided that Grantee remains an employee through the Vesting Date, except as may otherwise be provided herein.

     (b) Dividends, etc. If the Company (i) declares a dividend or makes a distribution on Common Stock in shares of Common Stock or (ii) subdivides or reclassifies outstanding shares of Common Stock into a greater number of shares of Common Stock or (iii) combines or reclassifies outstanding shares of Common Stock into a smaller number of shares of Common Stock, then the number of shares of Grantee’s Common Stock subject to the transfer restrictions in this Agreement shall be proportionally increased or reduced as to prevent enlargement or dilution of Grantee’s rights and duties hereunder. The determination of the Company’s Board of Directors regarding such adjustment should be final and binding.

     3. Vesting on Change in Control. Notwithstanding the provisions in Section 2, on the date immediately preceding the date of a Change in Control of the Company (as defined below), the Restricted Shares shall be 100% vested. For purposes of this Agreement, a “Change in Control” shall mean the occurrence of any of the following events:

          (i) the Company (A) shall not be the surviving entity in any merger, consolidation or other reorganization (or survives only as a subsidiary of an entity other than a previously wholly-owned subsidiary of the Company) or (B) is to be dissolved and liquidated, and as a result of or in connection with such transaction, the persons who were directors of the Company before such transaction shall cease to constitute a majority of the Board, or

          (ii) any person or entity, including a “group” as contemplated by Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, acquires or gains ownership or control (including, without limitation, power to vote) of 30% or more of the outstanding shares of the Company’s voting stock (based upon voting power), and as a result of or in connection with such transaction, the persons who were directors of the Company before such transaction shall cease to constitute a majority of the Board, or

          (iii) the Company sells all or substantially all of the assets of the Company to any other person or entity (other than a wholly-owned subsidiary of the Company) in a transaction that requires shareholder approval pursuant to applicable corporate law; or

          (iv) During a period of two consecutive calendar years, individuals who at the beginning of such period constitute the Board, and any new director(s) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least a majority of the directors then still in office, who either were directors at the beginning of the two (2) year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board; or

          (v) any other event that a majority of the Board, in its sole discretion, shall determine constitutes a Change in Control hereunder.

     4. Forfeiture.

     (a) Termination of Employment. If Grantee’s employment with the Company is terminated by the Company or Grantee for any reason, then Grantee shall immediately forfeit all

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Restricted Shares which are unvested unless the Board of Directors, in its sole discretion, determines that any or all of such unvested Restricted Shares shall not be so forfeited.

     (b) Forfeited Shares. Any Restricted Shares forfeited under this Section 4 shall automatically revert to the Company and become canceled. Any certificate(s) representing Restricted Shares which include forfeited shares shall only represent that number of Restricted Shares which have not been forfeited hereunder. Upon the Company’s request, Grantee agrees for himself and any other holder(s) to tender to the Company any certificate(s) representing Restricted Shares which include forfeited shares for a new certificate representing the unforfeited number of Restricted Shares.

     5. Issuance of Certificate.

     (a) The Company shall cause to be issued a stock certificate, registered in the name of the Grantee, evidencing the Restricted Shares upon receipt of a stock power duly endorsed in blank with respect to such shares. In addition to any other legends that may be required by applicable law or otherwise, each such stock certificate shall bear the legends substantially as follows:

THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER ANY APPLICABLE STATE SECURITIES LAWS, AND THEY CANNOT BE OFFERED FOR SALE, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE HYPOTHECATED EXCEPT IN ACCORDANCE WITH THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH STATE LAWS OR UPON DELIVERY TO THIS CORPORATION OF AN OPINION OF LEGAL COUNSEL SATISFACTORY TO THE CORPORATION THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE.

THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED HEREBY ARE SUBJECT TO THE RESTRICTIONS, TERMS AND CONDITIONS (INCLUDING FORFEITURE AND RESTRICTIONS AGAINST TRANSFER) CONTAINED IN THE RESTRICTED STOCK AGREEMENT ENTERED INTO BETWEEN THE REGISTERED OWNER OF SUCH SHARES AND ENDEAVOUR INTERNATIONAL CORPORATION. COPIES OF THE RESTRICTED STOCK AGREEMENT ARE ON FILE IN THE OFFICE OF THE SECRETARY OF ENDEAVOUR INTERNATIONAL CORPORATION, LOCATED AT 1000 MAIN STREET, SUITE 3300, HOUSTON, TEXAS 77002.

The latter legend shall not be removed from the certificate evidencing Restricted Shares until such time as the restrictions thereon have lapsed.

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     (b) The certificate issued pursuant to this Section 5, together with the stock powers relating to the Restricted Shares evidenced by such certificate, shall be held by the Company. The Company may issue to the Grantee a receipt evidencing the certificates held by it which are registered in the name of the Grantee.

     6. Tax Requirements.

     (a) Tax Withholding. The Company shall have the power and the right to deduct or withhold, or require the Participant to remit to the Company, an amount sufficient to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of this grant.

     (b) Share Withholding. With respect to tax withholding required upon any taxable event arising as a result of this grant, Participant may elect, subject to the approval of the Board or Committee in its sole discretion, to satisfy the withholding requirement, in whole or in part, by having the Company withhold shares of common stock having a fair market value on the date the tax is to be determined equal to the statutory total tax which could be imposed on the transaction. All such elections shall be made in writing, signed by the Participant, and shall be subject to any restrictions or limitations that the Committee, in its discretion, deems appropriate. Any fraction of a share of common stock required to satisfy such obligation shall be disregarded and the amount due shall instead be paid in cash by the Participant.

     7. Miscellaneous.

     (a) Certain Transfers Void. Any purported transfer of Restricted Shares in breach of any provision of this Agreement shall be void and ineffectual, and shall not operate to transfer any interest or title in the purported transferee.

     (b) No Fractional Shares. All provisions of this Agreement concern whole shares of Common Stock. If the application of any provision hereunder would yield a fractional share, the value of such fractional share shall be paid to the Grantee in cash.

     (c) Not an Employment Agreement. This Agreement is not an employment agreement, and this Agreement shall not be, and no provision of this Agreement shall be construed or interpreted to create any employment relationship or right to continued employment with the Company, Company affiliates, parent, subsidiary or their affiliates.

     (d) Investment Representation. Grantee represents and warrants to the Company as follows:

          (i) Grantee is acquiring the Restricted Shares granted pursuant to the terms hereof, for his own account, for investment, and not with a view to (or for sale in connection with) any distribution thereof, other than pursuant to any effective registration statement filed under the Securities Act of 1933, as amended (the “Securities Act”), registering the of resale of the Restricted Shares. Grantee has no present intention of selling, granting any participation in or otherwise distributing the Restricted Shares. Grantee (a) has such knowledge and experience in financial and business matters and with respect to investments in securities as to be capable of evaluating the merits and risks of the investments contemplated by this Agreement, (b) can bear

4

the economic risk of the investments contemplated by this Agreement (including a complete loss of its investment) for an indefinite period of time.

          (ii) Grantee is a bona fide resident of the State of Texas and he has no present intention of becoming a resident of any other state or jurisdiction.

          (iii) Grantee understands that the Registered Shares have not been registered under the Securities Act, have not been registered under the securities laws of any state or jurisdiction and may be required to be held indefinitely unless a subsequent disposition thereof is registered under the Securities Act or applicable blue sky laws or unless an exemption from such registration is available.

          (iv) Grantee believes it has received all the information it considers necessary or appropriate for deciding whether to acquire the Restricted Shares. Grantee further represents that it has had an opportunity to ask questions and receive answers from the Company regarding his investment in the Company.

     (e) Dispute Resolution.

          (i) Arbitration. All disputes and controversies of every kind and nature between any parties hereto arising out of or in connection with this Agreement or the transactions described herein as to the construction, validity, interpretation or meaning, performance, non-performance, enforcement, operation or breach, shall be submitted to arbitration pursuant to the following procedures:

               (1) After a dispute or controversy arises, any party may, in a written notice delivered to the other parties to the dispute, demand such arbitration. Such notice shall designate the name of the arbitrator (who shall be an impartial person) appointed by such party demanding arbitration, together with a statement of the matter in controversy.

               (2) Within 30 days after receipt of such demand, the other parties shall, in a written notice delivered to the first party, name such parties’ arbitrator (who shall be an impartial person). If such parties fail to name an arbitrator, then the second arbitrator shall be named by the American Arbitration Association (the “AAA”). The two arbitrators so selected shall name a third arbitrator (who shall be an impartial person) within 30 days, or in lieu of such agreement on a third arbitrator by the two arbitrators so appointed, the third arbitrator shall be appointed by the AAA. If any arbitrator appointed hereunder shall die, resign, refuse or become unable to act before an arbitration decision is rendered, then the vacancy shall be filled by the method set forth in this Section for the original appointment of such arbitrator.

               (3) Each party shall bear its own arbitration costs and expenses. The arbitration hearing shall be held in Houston, Texas at a location designated by a majority of the arbitrators. The Commercial Arbitration Rules of the American Arbitration Association shall be incorporated by reference at such hearing and the substantive laws of the State of Texas (excluding conflict of laws provisions) shall apply.

5

               (4) The arbitration hearing shall be concluded within ten (10) days unless otherwise ordered by the arbitrators and the written award thereon shall be made within fifteen (15) days after the close of submission of evidence. An award rendered by a majority of the arbitrators appointed pursuant to this Agreement shall be final and binding on all parties to the proceeding, shall resolve the question of costs of the arbitrators and all related matters, and judgment on such award may be entered and enforced by either party in any court of competent jurisdiction.

               (5) Except as set forth in Section 7(e)(ii), the parties stipulate that the provisions of this Section shall be a complete defense to any suit, action or proceeding instituted in any federal, state or local court or before any administrative tribunal with respect to any controversy or dispute arising out of this Agreement or the transactions described herein. The arbitration provisions hereof shall, with respect to such controversy or dispute, survive the termination or expiration of this Agreement.

No party to an arbitration may disclose the existence or results of any arbitration hereunder without the prior written consent of the other parties; nor will any party to an arbitration disclose to any third party any confidential information disclosed by any other party to an arbitration in the course of an arbitration hereunder without the prior written consent of such other party.

          (ii) Emergency Relief. Notwithstanding anything in this Section 7(e) to the contrary, any party may seek from a court any provisional remedy that may be necessary to protect any rights or property of such party pending the establishment of the arbitral tribunal or its determination of the merits of the controversy or to enforce a party’s rights under Section 7(e).

     (f) Notices. Any notice, instruction, authorization, request or demand required hereunder shall be in writing, and shall be delivered either by personal in-hand delivery, by telecopy or similar facsimile means, by certified or registered mail, return receipt requested, or by courier or delivery service, addressed to the Company at the address indicated beneath its signature on the execution page of this Agreement, and to Grantee at his address indicated on the Company’s stock records, or at such other address and number as a party shall have previously designated by written notice given to the other party in the manner herein set forth. Notices shall be deemed given when received, if sent by facsimile means (confirmation of such receipt by confirmed facsimile transmission being deemed receipt of communications sent by facsimile means), and when delivered and receipted for (or upon the date of attempted delivery where delivery is refused), if hand-delivered, sent by express courier or delivery service, or sent by certified or registered mail, return receipt requested.

     (g) Amendment and Waiver. This Agreement may be amended, modified or superseded only by written instrument executed by the Company and Grantee. Any waiver of the terms or conditions hereof shall be made only by a written instrument executed and delivered by the party waiving compliance. Any amendment or waiver agreed to by the Company shall be effective only if executed and delivered by a duly authorized executive officer of the Company other than Grantee. The failure of any party at any time or times to require performance of any provisions hereof shall in no manner effect the right to enforce the same. No waiver by any

6

party of any term or condition in this Agreement, or breach thereof, in one or more instances shall be deemed a continuing waiver of any such condition or breach, a waiver of any other condition, or the breach of any other term or condition.

     (h) Independent Legal and Tax Advice. The Grantee has been advised and Grantee hereby acknowledges that he or she has been advised to obtain independent legal and tax advice regarding this grant of Restricted Shares and the disposition of such shares, including, without limitation, the election available under Section 83(b) of the Internal Revenue Code of 1986, as amended.

     (i) Governing Law and Severability. This Agreement shall be governed by the internal laws, and not the laws of conflict, of the State of Texas. The invalidity of any provision of this Agreement shall not affect any other provision of this Agreement which shall remain in full force and effect.

     (j) Successors and Assigns. Subject to the limitations which this Agreement imposes upon transferability of Restricted Shares, this Agreement shall bind, be enforceable by and inure to the benefit of the Company and its successors and assigns, and Grantee, and, upon his death, on his estate and beneficiaries thereof (whether by will or the laws of descent and distribution).

     (k) Community Property. Each spouse individually is bound by, and such spouse’s interest, if any, in any shares is subject to, the terms of this Agreement. Nothing in this Agreement shall create a community property interest where none otherwise exists.

     (l) Entire Agreement. This Agreement supersedes any and all other prior understandings and agreements, either oral or in writing, between the parties with respect to the subject matter hereof and constitute the sole and only agreements between the parties with respect to the said subject matter. All prior negotiations and agreements between the parties with respect to the subject matter hereof are merged into this Agreement. Each party to this Agreement acknowledges that no representations, inducements, promises, or agreements, orally or otherwise, have been made by any party or by anyone acting on behalf of any party, which are not embodied in this Agreement and that any agreement, statement or promise that is not contained in this Agreement shall not be valid or binding or of any force or effect.

[Signature page follows]

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     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the date first above written.

COMPANY:

ENDEAVOUR INTERNATIONAL CORPORATION

By: /s/ J. Michael Kirksey

Name:

Title:

Address: Endeavour International Corporation
1000 Main Street, Suite 3300
Houston, Texas 77002
Telecopy No.: (713) 307-8793
Attention: Secretary

GRANTEE:
 

/s/ J. Michael Kirksey  

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APPENDIX A TO
RESTRICTED STOCK AGREEMENT

Grantee’s Name: J. Michael Kirksey

	Number of
Grant Date:	Restricted Shares Granted
09/26/2007		400,000

Vesting Schedule:
Date	Number of Shares Vested
09/26/2008		133,333
09/26/2009		133,333
09/26/2010		133,334

Note: All vesting is subject to the terms and conditions of the Agreement.

EX-10.32

Exhibit 10.32

ENDEAVOUR INTERNATIONAL CORPORATION
RESTRICTED STOCK AWARD AGREEMENT

     THIS RESTRICTED STOCK AGREEMENT (this “Agreement”) is made and entered into by and between Endeavour International Corporation (the “Company”) and John G. Williams, an employee of the Company (“Grantee”), dated as of October 1, 2007 but effective as of the grant date(s) shown in Appendix A attached hereto.

     WHEREAS, effective John G. Williams Grantee shall be an employee of the Company and as an inducement for such employment and in connection with Grantee providing services to the Company as an employee, the Compensation Committee of the Board of Directors of the Company, on behalf of the Company, desires to grant to Grantee a number of restricted shares of the Company’s common stock, par value $.001 per share (the “Common Stock”), subject to the terms and conditions of this Agreement, with a view to increasing Grantee’s interest in the Company’s welfare and growth.

     NOW, THEREFORE, in consideration of the premises, mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:

     1. Grant of Common Stock. Subject to the restrictions, forfeiture provisions and other terms and conditions set forth herein (a) the Company hereby grants to Grantee the number of shares of Common Stock (“Restricted Shares”) as set out in Appendix A hereto, and (b) subject to the terms hereof, Grantee shall have and may exercise rights and privileges of ownership of such Restricted Shares, including, without limitation, the voting rights of such shares and the right to receive dividends declared in respect thereof. This Agreement and the grant of Restricted Shares are subject to administration by and the rules and procedures established by the Board of Directors of the Company (the “Board”) or a committee appointed by the Board to administer this Agreement (the “Committee”) and the Board or the Committee, if so appointed, shall have the authority to construe and interpret the terms of this Agreement and to provide omitted terms to carry out this Agreement. Except with respect to Section 3(v), any authority provided to the Company, the Board or Committee herein shall also be provided to the Committee, if one is appointed by the Board. The Committee shall have the authority to take all actions that it deems advisable for the administration of this Agreement.

     2. Transfer Restrictions; Vesting.

     (a) Generally. Grantee shall not sell, assign, transfer, exchange, pledge, encumber, gift, devise, hypothecate or otherwise dispose of (collectively, “Transfer”) any Restricted Shares prior to their vesting in accordance with the Vesting Schedule set out in Appendix A. Further, even after such Restricted Shares become vested, such vested Restricted Shares may not be sold or otherwise disposed of in any manner which would constitute a violation of any applicable federal or state securities or other applicable law or Company policies as determined by Company on advice of counsel chosen by the Company in its sole discretion. Restricted

Shares shall vest as of each of the Vesting Dates set out in Appendix A provided that Grantee remains an employee through the Vesting Date, except as may otherwise be provided herein.

     (b) Dividends, etc. If the Company (i) declares a dividend or makes a distribution on Common Stock in shares of Common Stock or (ii) subdivides or reclassifies outstanding shares of Common Stock into a greater number of shares of Common Stock or (iii) combines or reclassifies outstanding shares of Common Stock into a smaller number of shares of Common Stock, then the number of shares of Grantee’s Common Stock subject to the transfer restrictions in this Agreement shall be proportionally increased or reduced as to prevent enlargement or dilution of Grantee’s rights and duties hereunder. The determination of the Company’s Board of Directors regarding such adjustment should be final and binding.

     3. Vesting on Change in Control. Notwithstanding the provisions in Section 2, on the date immediately preceding the date of a Change in Control of the Company (as defined below), the Restricted Shares shall be 100% vested. For purposes of this Agreement, a “Change in Control” shall mean the occurrence of any of the following events:

          (i) the Company (A) shall not be the surviving entity in any merger, consolidation or other reorganization (or survives only as a subsidiary of an entity other than a previously wholly-owned subsidiary of the Company) or (B) is to be dissolved and liquidated, and as a result of or in connection with such transaction, the persons who were directors of the Company before such transaction shall cease to constitute a majority of the Board, or

          (ii) any person or entity, including a “group” as contemplated by Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, acquires or gains ownership or control (including, without limitation, power to vote) of 30% or more of the outstanding shares of the Company’s voting stock (based upon voting power), and as a result of or in connection with such transaction, the persons who were directors of the Company before such transaction shall cease to constitute a majority of the Board, or

          (iii) the Company sells all or substantially all of the assets of the Company to any other person or entity (other than a wholly-owned subsidiary of the Company) in a transaction that requires shareholder approval pursuant to applicable corporate law; or

          (iv) During a period of two consecutive calendar years, individuals who at the beginning of such period constitute the Board, and any new director(s) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least a majority of the directors then still in office, who either were directors at the beginning of the two (2) year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board; or

          (v) any other event that a majority of the Board, in its sole discretion, shall determine constitutes a Change in Control hereunder.

     4. Forfeiture.

     (a) Termination of Employment. If Grantee’s employment with the Company is terminated by the Company or Grantee for any reason, then Grantee shall immediately forfeit all

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Restricted Shares which are unvested unless the Board of Directors, in its sole discretion, determines that any or all of such unvested Restricted Shares shall not be so forfeited.

     (b) Forfeited Shares. Any Restricted Shares forfeited under this Section 4 shall automatically revert to the Company and become canceled. Any certificate(s) representing Restricted Shares which include forfeited shares shall only represent that number of Restricted Shares which have not been forfeited hereunder. Upon the Company’s request, Grantee agrees for himself and any other holder(s) to tender to the Company any certificate(s) representing Restricted Shares which include forfeited shares for a new certificate representing the unforfeited number of Restricted Shares.

     5. Issuance of Certificate.

     (a) The Company shall cause to be issued a stock certificate, registered in the name of the Grantee, evidencing the Restricted Shares upon receipt of a stock power duly endorsed in blank with respect to such shares. In addition to any other legends that may be required by applicable law or otherwise, each such stock certificate shall bear the legends substantially as follows:

THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER ANY APPLICABLE STATE SECURITIES LAWS, AND THEY CANNOT BE OFFERED FOR SALE, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE HYPOTHECATED EXCEPT IN ACCORDANCE WITH THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH STATE LAWS OR UPON DELIVERY TO THIS CORPORATION OF AN OPINION OF LEGAL COUNSEL SATISFACTORY TO THE CORPORATION THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE.

THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED HEREBY ARE SUBJECT TO THE RESTRICTIONS, TERMS AND CONDITIONS (INCLUDING FORFEITURE AND RESTRICTIONS AGAINST TRANSFER) CONTAINED IN THE RESTRICTED STOCK AGREEMENT ENTERED INTO BETWEEN THE REGISTERED OWNER OF SUCH SHARES AND ENDEAVOUR INTERNATIONAL CORPORATION. COPIES OF THE RESTRICTED STOCK AGREEMENT ARE ON FILE IN THE OFFICE OF THE SECRETARY OF ENDEAVOUR INTERNATIONAL CORPORATION, LOCATED AT 1000 MAIN STREET, SUITE 3300, HOUSTON, TEXAS 77002.

The latter legend shall not be removed from the certificate evidencing Restricted Shares until such time as the restrictions thereon have lapsed.

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     (b) The certificate issued pursuant to this Section 5, together with the stock powers relating to the Restricted Shares evidenced by such certificate, shall be held by the Company. The Company may issue to the Grantee a receipt evidencing the certificates held by it which are registered in the name of the Grantee.

     6. Tax Requirements.

     (a) Tax Withholding. The Company shall have the power and the right to deduct or withhold, or require the Participant to remit to the Company, an amount sufficient to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of this grant.

     (b) Share Withholding. With respect to tax withholding required upon any taxable event arising as a result of this grant, Participant may elect, subject to the approval of the Board or Committee in its sole discretion, to satisfy the withholding requirement, in whole or in part, by having the Company withhold shares of common stock having a fair market value on the date the tax is to be determined equal to the statutory total tax which could be imposed on the transaction. All such elections shall be made in writing, signed by the Participant, and shall be subject to any restrictions or limitations that the Committee, in its discretion, deems appropriate. Any fraction of a share of common stock required to satisfy such obligation shall be disregarded and the amount due shall instead be paid in cash by the Participant.

     7. Miscellaneous.

     (a) Certain Transfers Void. Any purported transfer of Restricted Shares in breach of any provision of this Agreement shall be void and ineffectual, and shall not operate to transfer any interest or title in the purported transferee.

     (b) No Fractional Shares. All provisions of this Agreement concern whole shares of Common Stock. If the application of any provision hereunder would yield a fractional share, the value of such fractional share shall be paid to the Grantee in cash.

     (c) Not an Employment Agreement. This Agreement is not an employment agreement, and this Agreement shall not be, and no provision of this Agreement shall be construed or interpreted to create any employment relationship or right to continued employment with the Company, Company affiliates, parent, subsidiary or their affiliates.

     (d) Investment Representation. Grantee represents and warrants to the Company as follows:

          (i) Grantee is acquiring the Restricted Shares granted pursuant to the terms hereof, for his own account, for investment, and not with a view to (or for sale in connection with) any distribution thereof, other than pursuant to any effective registration statement filed under the Securities Act of 1933, as amended (the “Securities Act”), registering the of resale of the Restricted Shares. Grantee has no present intention of selling, granting any participation in or otherwise distributing the Restricted Shares. Grantee (a) has such knowledge and experience in financial and business matters and with respect to investments in securities as to be capable of evaluating the merits and risks of the investments contemplated by this Agreement, (b) can bear

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the economic risk of the investments contemplated by this Agreement (including a complete loss of its investment) for an indefinite period of time.

          (ii) Grantee is a bona fide resident of the State of Texas and he has no present intention of becoming a resident of any other state or jurisdiction.

          (iii) Grantee understands that the Registered Shares have not been registered under the Securities Act, have not been registered under the securities laws of any state or jurisdiction and may be required to be held indefinitely unless a subsequent disposition thereof is registered under the Securities Act or applicable blue sky laws or unless an exemption from such registration is available.

          (iv) Grantee believes it has received all the information it considers necessary or appropriate for deciding whether to acquire the Restricted Shares. Grantee further represents that it has had an opportunity to ask questions and receive answers from the Company regarding his investment in the Company.

     (e) Dispute Resolution.

          (i) Arbitration. All disputes and controversies of every kind and nature between any parties hereto arising out of or in connection with this Agreement or the transactions described herein as to the construction, validity, interpretation or meaning, performance, non-performance, enforcement, operation or breach, shall be submitted to arbitration pursuant to the following procedures:

               (1) After a dispute or controversy arises, any party may, in a written notice delivered to the other parties to the dispute, demand such arbitration. Such notice shall designate the name of the arbitrator (who shall be an impartial person) appointed by such party demanding arbitration, together with a statement of the matter in controversy.

               (2) Within 30 days after receipt of such demand, the other parties shall, in a written notice delivered to the first party, name such parties’ arbitrator (who shall be an impartial person). If such parties fail to name an arbitrator, then the second arbitrator shall be named by the American Arbitration Association (the “AAA”). The two arbitrators so selected shall name a third arbitrator (who shall be an impartial person) within 30 days, or in lieu of such agreement on a third arbitrator by the two arbitrators so appointed, the third arbitrator shall be appointed by the AAA. If any arbitrator appointed hereunder shall die, resign, refuse or become unable to act before an arbitration decision is rendered, then the vacancy shall be filled by the method set forth in this Section for the original appointment of such arbitrator.

               (3) Each party shall bear its own arbitration costs and expenses. The arbitration hearing shall be held in Houston, Texas at a location designated by a majority of the arbitrators. The Commercial Arbitration Rules of the American Arbitration Association shall be incorporated by reference at such hearing and the substantive laws of the State of Texas (excluding conflict of laws provisions) shall apply.

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               (4) The arbitration hearing shall be concluded within ten (10) days unless otherwise ordered by the arbitrators and the written award thereon shall be made within fifteen (15) days after the close of submission of evidence. An award rendered by a majority of the arbitrators appointed pursuant to this Agreement shall be final and binding on all parties to the proceeding, shall resolve the question of costs of the arbitrators and all related matters, and judgment on such award may be entered and enforced by either party in any court of competent jurisdiction.

               (5) Except as set forth in Section 7(e)(ii), the parties stipulate that the provisions of this Section shall be a complete defense to any suit, action or proceeding instituted in any federal, state or local court or before any administrative tribunal with respect to any controversy or dispute arising out of this Agreement or the transactions described herein. The arbitration provisions hereof shall, with respect to such controversy or dispute, survive the termination or expiration of this Agreement.

No party to an arbitration may disclose the existence or results of any arbitration hereunder without the prior written consent of the other parties; nor will any party to an arbitration disclose to any third party any confidential information disclosed by any other party to an arbitration in the course of an arbitration hereunder without the prior written consent of such other party.

          (ii) Emergency Relief. Notwithstanding anything in this Section 7(e) to the contrary, any party may seek from a court any provisional remedy that may be necessary to protect any rights or property of such party pending the establishment of the arbitral tribunal or its determination of the merits of the controversy or to enforce a party’s rights under Section 7(e).

     (f) Notices. Any notice, instruction, authorization, request or demand required hereunder shall be in writing, and shall be delivered either by personal in-hand delivery, by telecopy or similar facsimile means, by certified or registered mail, return receipt requested, or by courier or delivery service, addressed to the Company at the address indicated beneath its signature on the execution page of this Agreement, and to Grantee at his address indicated on the Company’s stock records, or at such other address and number as a party shall have previously designated by written notice given to the other party in the manner herein set forth. Notices shall be deemed given when received, if sent by facsimile means (confirmation of such receipt by confirmed facsimile transmission being deemed receipt of communications sent by facsimile means), and when delivered and receipted for (or upon the date of attempted delivery where delivery is refused), if hand-delivered, sent by express courier or delivery service, or sent by certified or registered mail, return receipt requested.

     (g) Amendment and Waiver. This Agreement may be amended, modified or superseded only by written instrument executed by the Company and Grantee. Any waiver of the terms or conditions hereof shall be made only by a written instrument executed and delivered by the party waiving compliance. Any amendment or waiver agreed to by the Company shall be effective only if executed and delivered by a duly authorized executive officer of the Company other than Grantee. The failure of any party at any time or times to require performance of any provisions hereof shall in no manner effect the right to enforce the same. No waiver by any

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party of any term or condition in this Agreement, or breach thereof, in one or more instances shall be deemed a continuing waiver of any such condition or breach, a waiver of any other condition, or the breach of any other term or condition.

     (h) Independent Legal and Tax Advice. The Grantee has been advised and Grantee hereby acknowledges that he or she has been advised to obtain independent legal and tax advice regarding this grant of Restricted Shares and the disposition of such shares, including, without limitation, the election available under Section 83(b) of the Internal Revenue Code of 1986, as amended.

     (i) Governing Law and Severability. This Agreement shall be governed by the internal laws, and not the laws of conflict, of the State of Texas. The invalidity of any provision of this Agreement shall not affect any other provision of this Agreement which shall remain in full force and effect.

     (j) Successors and Assigns. Subject to the limitations which this Agreement imposes upon transferability of Restricted Shares, this Agreement shall bind, be enforceable by and inure to the benefit of the Company and its successors and assigns, and Grantee, and, upon his death, on his estate and beneficiaries thereof (whether by will or the laws of descent and distribution).

     (k) Community Property. Each spouse individually is bound by, and such spouse’s interest, if any, in any shares is subject to, the terms of this Agreement. Nothing in this Agreement shall create a community property interest where none otherwise exists.

     (l) Entire Agreement. This Agreement supersedes any and all other prior understandings and agreements, either oral or in writing, between the parties with respect to the subject matter hereof and constitute the sole and only agreements between the parties with respect to the said subject matter. All prior negotiations and agreements between the parties with respect to the subject matter hereof are merged into this Agreement. Each party to this Agreement acknowledges that no representations, inducements, promises, or agreements, orally or otherwise, have been made by any party or by anyone acting on behalf of any party, which are not embodied in this Agreement and that any agreement, statement or promise that is not contained in this Agreement shall not be valid or binding or of any force or effect.

[Signature page follows]

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     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the date first above written.

COMPANY:

ENDEAVOUR INTERNATIONAL CORPORATION

By: /s/ Don Teague

Name: Don Teague

Title: Executive Vice President and General Counsel

Address: Endeavour International Corporation
1000 Main Street, Suite 3300
Houston, Texas 77002
Telecopy No.: (713) 307-8793
Attention: Secretary

GRANTEE:
 

/s/ John Williams  

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APPENDIX A TO
RESTRICTED STOCK AGREEMENT

Grantee’s Name: John G. Williams

	Number of
Grant Date:	Restricted Shares Granted
10/01/2007		400,000

Vesting Schedule:
Date	Number of Shares Vested
10/01/2008		133,333
10/01/2009		133,333
10/01/2010		133,334

Note: All vesting is subject to the terms and conditions of the Agreement.

EX-10.33

Exhibit 10.33

ENDEAVOUR INTERNATIONAL CORPORATION
NONSTATUTORY STOCK OPTION AGREEMENT

     THIS NONSTATUTORY STOCK OPTION AGREEMENT (this “Agreement”) is made and entered into by and between Endeavour International Corporation (the “Company”), and J. Michael Kirksey (“Grantee”), an employee of the Company effective as of the Date of Grant as defined below.

     WHEREAS, Grantee shall be an employee of the Company on September 26, 2007, and as an inducement for such employment and in connection with such employment, the Compensation Committee of the Board of Directors of the Company, on behalf of the Company, authorized a grant to Grantee of a nonstatutory stock option to purchase the Company’s common stock, par value $.001 per share (the “Common Stock”), effective September 26, 2007, in the amount indicated below, which shall be subject to the terms and conditions of this Agreement, with a view to increasing Grantee’s interest in the Company’s welfare and growth; and

     WHEREAS, Grantee desires to receive such a nonstatutory option to purchase shares of Common Stock as an inducement for his employment and in connection with his employment with the Company.

     NOW, THEREFORE, in consideration of the premises, mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:

     1. Grant of Nonstatutory Stock Option. Subject to the restrictions, forfeiture provisions and other terms set forth herein, the Company hereby grants to the Grantee an option (the “Option” or “Stock Option”) to purchase 400,000 full shares (the “Optioned Shares”) of Common Stock at an “Option Price” equal to $2.00 per share. The Date of Grant of this Stock Option is September 26, 2007.

     The “Option Period” shall commence on the Date of Grant and shall expire on the date immediately preceding the fifth (5^th) anniversary of the Date of Grant. This Stock Option is a Nonstatutory Stock Option.

     2. Administration. This Agreement and the grant of the Option are subject to administration by and the rules and procedures established by the “Committee” (as defined herein) to administer this Agreement. The Committee shall mean the members of the compensation committee of the Board who are independent members of the compensation committee of the Board and who at least constitute a majority thereof, or if no such members are available, a majority of the independent members of the Board. The Committee shall have the authority to construe and interpret the terms of this Agreement and to provide omitted terms or definitions of terms to carry out this Agreement. The Committee shall have the authority to take all actions that it deems advisable for the administration of this Agreement. Any decision of the Committee in connection with this Agreement shall be final, binding and conclusive on the parties hereto and any third parties, including any individual or entity.

     3. Vesting: Time of Exercise. Except as specifically provided in this Agreement, the Stock Option shall be vested and exercisable as follows:

     (a) With respect to 33.3% of the total Optioned Shares, the Stock Option shall vest and become exercisable on September 26, 2008, provided the Grantee is employed by the Company or a subsidiary on that date.

     (b) With respect to 33.3% of the total Optioned Shares, the Stock Option shall vest and become exercisable on September 26, 2009, provided the Grantee is employed by the Company or a subsidiary on that date.

     (c) With respect to 33.3% of the total Optioned Shares, the Stock Option shall vest and become exercisable on September 26, 2010, provided the Grantee is employed by the Company or a subsidiary on that date.

     (d) Grantee shall become 100% vested in the total Optioned Shares hereunder on the day preceding an event which constitutes a Change in Control.

     For purposes of this Agreement, a “Change in Control” shall mean the occurrence of any of the following events:

     (i) the Company (A) shall not be the surviving entity in any merger, consolidation or other reorganization (or survives only as a subsidiary of an entity other than a previously wholly-owned subsidiary of the Company) or (B) is to be dissolved and liquidated, and as a result of or in connection with such transaction, the persons who were directors of the Company before such transaction shall cease to constitute a majority of the Board, or

     (ii) any person or entity, including a “group” as contemplated by Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, acquires or gains ownership or control (including, without limitation, power to vote) of 30% or ore of the outstanding shares of the Company’s voting stock (based upon voting power), and as a result of or in connection with such transaction, the persons who were directors of the Company before such transaction shall cease to constitute a majority of the Board, or

     (iii) the Company sells all or substantially all of the assets of the Company to any other person or entity (other than a wholly-owned subsidiary of the Company) in a transaction that requires shareholder approval pursuant to applicable corporate law; or

     (iv) During a period of two consecutive calendar years, individuals who at the beginning of such period constitute the Board, and any new director(s) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least a majority of the directors then still in office, who either were directors at the beginning of the two (2) year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board; or

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     (v) any other event that a majority of the Board, in its sole discretion, shall determine constitutes a Change in Control hereunder.

     4. Term; Forfeiture. In the event of Grantee’s termination of employment with the Company and its affiliates (a “Termination of Employment”) for any reason (including for cause) other than Grantee’s death, disability or retirement, the Option outstanding on such date of Termination of Employment, to the extent vested on such date, may be exercised by Grantee (or, in the event of Grantee’s subsequent death, by Grantee’s Heir (as defined below)) within three months following such Termination of Employment, but not thereafter. In the event that, as a result of such Termination of Employment, Grantee is eligible to receive severance benefits under any Company plan, program or severance agreement, the Option outstanding on such date of Termination of Employment, to the extent vested on such date, may be exercised by Grantee (or, in the event of Grantee’s subsequent death, by Grantee’s Heir (as defined below)) within twelve months following such Termination of Employment, but not thereafter. However, in no event shall the Option be exercisable after the fifth (5^th) anniversary of the Grant Date. To the extent the Option is not vested on Grantee’s date of Termination of Employment, the Option shall automatically lapse and be canceled unexercised as of such date.

     In the event of Grantee’s Termination of Employment by reason of death, disability or retirement, as determined by the Committee in its sole discretion, the Option shall be fully vested on such date of termination and may be exercised by Grantee or, in the event of Grantee’s death, by the person to whom Grantee’s rights shall pass by will or the laws of descent and distribution (“Heir”), at any time within the two-year period beginning on Grantee’s Termination of Employment, but not thereafter. However, in no event shall the Option be exercisable after the fifth (5^th) anniversary of the Grant Date.

     5. Who May Exercise. Subject to the terms and conditions set forth in Sections 3 and 4 above, during the lifetime of the Grantee, the Stock Option may be exercised only by the Grantee, or by the Grantee’s guardian or personal or legal representative (in the event of his or her Disability or by a broker dealer subject to Section 7 below).

     6. No Fractional Shares. The Stock Option may be exercised only with respect to full shares, and no fractional share of stock shall be issued.

     7. Manner of Exercise. Subject to such administrative regulations as the Committee may from time to time adopt, the Option may be exercised by the delivery of written notice to the Committee or designated Company representative setting forth the number of shares of Common Stock with respect to which the Option is to be exercised, the date of exercise thereof (the “Exercise Date”) which shall be at least three (3) days after giving such notice unless an earlier time shall have been mutually agreed upon. On the Exercise Date, the Grantee shall deliver to the Company consideration with a value equal to the total Option Price of the shares to be purchased, payable to the Company in full in either: (i) in cash or its equivalent, or (ii) subject to prior approval by the Committee in its discretion, by tendering previously acquired shares of Common Stock having an aggregate fair market value at the time of exercise equal to the total Option Price (provided that the shares of Common Stock which are tendered must have been held by the Grantee for at least six (6) months prior to their tender to satisfy the Option Price), or (iii) subject to prior approval by the Committee in its discretion, by withholding shares of

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Common Stock which otherwise would be acquired on exercise having an aggregate fair market value at the time of exercise equal to the total Option Price, or (iv) subject to prior approval by the Committee in its discretion, by a combination of (i), (ii), and (iii) above. Any payment in shares of Common Stock shall be effected by the surrender of such shares to the Company in good form for transfer and shall be valued at their fair market value on the date when the Stock Option is exercised. Unless otherwise permitted by the Committee in its discretion, the Grantee shall not surrender, or attest to the ownership of, shares of Common Stock in payment of the Option Price if such action would cause the Company to recognize compensation expense (or additional compensation expense) with respect to the Option for financial reporting purposes.

     The Committee, in its discretion, also may allow the Option Price to be paid with such other consideration as shall constitute lawful consideration for the issuance of shares of Common Stock (including, without limitation, effecting a “cashless exercise” with a broker of the Option), subject to applicable securities law restrictions and tax withholdings, or by any other means which the Committee determines to be consistent with the Agreement’s purpose and applicable law. A “cashless exercise” of an Option is a procedure by which a broker provides the funds to the Grantee to effect an Option exercise, to the extent consented to by the Committee in its discretion. At the direction of the Grantee, the broker will either (i) sell all of the shares of Common Stock received when the Option is exercised and pay the Grantee the proceeds of the sale (minus the Option Price, withholding taxes and any fees due to the broker) or (ii) sell enough of the shares of Common Stock received upon exercise of the Option to cover the Option Price, withholding taxes and any fees due the broker and deliver to the Grantee (either directly or through the Company) a stock certificate for the remaining shares of Common Stock. Dispositions to a broker effecting a cashless exercise are not exempt under Section 16 of the Exchange Act. In no event will the Committee allow the Option Price to be paid with a form of consideration, including a loan or a “cashless exercise,” if such form of consideration would violate the Sarbanes-Oxley Act of 2002 as determined by the Committee in its discretion.

     As soon as practicable after receipt of a written notification of exercise and full payment, the Company shall deliver, or cause to be delivered, to or on behalf of the Grantee, in the name of the Grantee or other appropriate recipient, share certificates for the number of shares of Common Stock purchased under the Option. Such delivery shall be effected for all purposes when the Company or a stock transfer agent of the Company shall have deposited such certificates in the United States mail, addressed to Grantee or other appropriate recipient.

     If the Grantee fails to pay for any of the shares of Common Stock specified in such notice or fails to accept delivery thereof, then the Option, and right to purchase such shares of Common Stock may be forfeited by the Company.

     8. Nonassignability. The Stock Option is not assignable or transferable by the Grantee except by will or by the laws of descent and distribution or pursuant to a domestic relations order that would qualify as a qualified domestic relations order as defined in Section 414(p) of the Code, if such provision were applicable to the Stock Option.

     9. Rights as Stockholder. The Grantee will have no rights as a stockholder with respect to any shares covered by the Stock Option until the issuance of a certificate or certificates to the Grantee for the Optioned Shares. The Optioned Shares shall be subject to the terms and

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conditions of this Agreement regarding such shares. Except as otherwise provided in Section 10 hereof, no adjustment shall be made for dividends or other rights for which the record date is prior to the issuance of such certificate or certificates.

     10. Adjustment of Number of Optioned Shares and Related Matters. In the event that any dividend or other distribution (whether in the form of cash, Common Stock, or other property), recapitalization, forward or reverse split, reorganization, merger, consolidation, spin-off, combination, repurchase, share exchange, liquidation, dissolution or other similar transaction or event affects the Common Stock such that an adjustment is determined by the Committee to be appropriate under this Agreement, then the Committee may make adjustments to this Agreement and the Optioned Shares in accordance with applicable laws as it may deem equitable.

     11. Community Property. Each spouse individually is bound by, and such spouse’s interest, if any, in any share of Common Stock is subject to, the terms of this Agreement. Nothing in this Agreement shall create a community property interest where none otherwise exists.

     12. Dispute Resolution.

     (a) Arbitration. All disputes and controversies of every kind and nature between any parties hereto arising out of or in connection with this Agreement or the transactions described herein as to the construction, validity, interpretation or meaning, performance, non-performance, enforcement, operation or breach, shall be submitted to arbitration pursuant to the following procedures:

     (i) After a dispute or controversy arises, any party may, in a written notice delivered to the other parties to the dispute, demand such arbitration. Such notice shall designate the name of the arbitrator (who shall be an impartial person) appointed by such party demanding arbitration, together with a statement of the matter in controversy.

     (ii) Within 30 days after receipt of such demand, the other parties shall, in a written notice delivered to the first party, name such parties’ arbitrator (who shall be an impartial person). If such parties fail to name an arbitrator, then the second arbitrator shall be named by the American Arbitration Association (the “AAA”). The two arbitrators so selected shall name a third arbitrator (who shall be an impartial person) within 30 days, or in lieu of such agreement on a third arbitrator by the two arbitrators so appointed, the third arbitrator shall be appointed by the AAA. If any arbitrator appointed hereunder shall die, resign, refuse or become unable to act before an arbitration decision is rendered, then the vacancy shall be filled by the method set forth in this Section for the original appointment of such arbitrator.

     (iii) Each party shall bear its own arbitration costs and expenses. The arbitration hearing shall be held in Houston, Texas at a location designated by a majority of the arbitrators. The Commercial Arbitration Rules of the American

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Arbitration Association shall be incorporated by reference at such hearing and the substantive laws of the State of Texas (excluding conflict of laws provisions) shall apply.

     (iv) The arbitration hearing shall be concluded within ten (10) days unless otherwise ordered by the arbitrators and the written award thereon shall be made within fifteen (15) days after the close of submission of evidence. An award rendered by a majority of the arbitrators appointed pursuant to this Agreement shall be final and binding on all parties to the proceeding, shall resolve the question of costs of the arbitrators and all related matters, and judgment on such award may be entered and enforced by either party in any court of competent jurisdiction.

     (v) Except as set forth in Section 12(b) below, the parties stipulate that the provisions of this Section shall be a complete defense to any suit, action or proceeding instituted in any federal, state or local court or before any administrative tribunal with respect to any controversy or dispute arising out of this Agreement or the transactions described herein. The arbitration provisions hereof shall, with respect to such controversy or dispute, survive the termination or expiration of this Agreement.

No party to an arbitration may disclose the existence or results of any arbitration hereunder without the prior written consent of the other parties; nor will any party to an arbitration disclose to any third party any confidential information disclosed by any other party to an arbitration in the course of an arbitration hereunder without the prior written consent of such other party.

     (b) Emergency Relief. Notwithstanding anything in this Section 12 to the contrary, any party may seek from a court any provisional remedy that may be necessary to protect any rights or property of such party pending the establishment of the arbitral tribunal or its determination of the merits of the controversy or to enforce a party’s rights under Section 12.

     13. Grantee’s Representations. Notwithstanding any of the provisions hereof, the Grantee hereby agrees that he will not exercise the Stock Option granted hereby, and that the Company will not be obligated to issue any shares to the Grantee hereunder, if the exercise thereof or the issuance of such shares of Common Stock shall constitute a violation by the Grantee or the Company of any provision of any law or regulation of any governmental authority or Company policies, or the rules of the stock exchange on which the Common Stock is listed or traded. Any determination in this connection by the Company shall be final, binding, and conclusive. The obligations of the Company and the rights of the Grantee are subject to all applicable laws, rules, and regulations, rules of the stock exchange on which the Common Stock is listed or traded and policies of the Company.

     14. Investment Representation. The Grantee represents and warrants to the Company that all Common Stock which may be purchased hereunder will be acquired by the Grantee for

6

investment purposes for his own account and not with any intent for resale or distribution in violation of federal or state securities laws.

     15. Grantee’s Acknowledgments. The Grantee represents that he or she is familiar with the terms and provisions of this Agreement, and hereby accepts this Option subject to all the terms and provisions thereof. The Grantee hereby agrees to accept as binding, conclusive, and final all decisions or interpretations of the Committee, the Company or the Board, as appropriate, upon any questions arising under this Agreement.

     16. Law Governing. This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Texas (excluding any conflict of laws rule or principle of Texas law that might refer the governance, construction, or interpretation of this agreement to the laws of another state).

     17. No Right to Continue Service or Employment. Nothing herein shall be construed to confer upon the Grantee the right to be employed or to provide services to the Company, its affiliates or any parent or subsidiary or their affiliates, whether as an employee or as a consultant or as a director of the Board, or interfere with or restrict in any way the right of the Company or any of the other foregoing entities to discharge the Grantee as an employee, consultant or director of the Board at any time.

     18. Legal Construction. In the event that any one or more of the terms, provisions, or agreements that are contained in this Agreement shall be held by a court of competent jurisdiction to be invalid, illegal, or unenforceable in any respect for any reason, the invalid, illegal, or unenforceable term, provision, or agreement shall not affect any other term, provision, or agreement that is contained in this Agreement and this Agreement shall be construed in all respects as if the invalid, illegal, or unenforceable term, provision, or agreement had never been contained herein.

     19. Covenants and Agreements as Independent Agreements. Each of the covenants and agreements that is set forth in this Agreement shall be construed as a covenant and agreement independent of any other provision of this Agreement. The existence of any claim or cause of action of the Grantee against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of the covenants and agreements that are set forth in this Agreement.

     20. Entire Agreement. This Agreement supersedes any and all other prior understandings and agreements, either oral or in writing, between the parties with respect to the subject matter hereof and constitute the sole and only agreements between the parties with respect to the said subject matter. All prior negotiations and agreements between the parties with respect to the subject matter hereof are merged into this Agreement. Each party to this Agreement acknowledges that no representations, inducements, promises, or agreements, orally or otherwise, have been made by any party or by anyone acting on behalf of any party, which are not embodied in this Agreement and that any agreement, statement or promise that is not contained in this Agreement shall not be valid or binding or of any force or effect.

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     21. Parties Bound. The terms, provisions, and agreements that are contained in this Agreement shall apply to, be binding upon, and inure to the benefit of the parties and their respective heirs, executors, administrators, legal representatives, and permitted successors and assigns, subject to the limitation on assignment expressly set forth herein.

     22. Modification. No change or modification of this Agreement shall be valid or binding upon the parties unless the change or modification is in writing and signed by the parties.

     23. Headings. The headings that are used in this Agreement are used for reference and convenience purposes only and do not constitute substantive matters to be considered in construing the terms and provisions of this Agreement.

     24. Gender and Number. Words of any gender used in this Agreement shall be held and construed to include any other gender, and words in the singular number shall be held to include the plural, and vice versa, unless the context requires otherwise.

     25. Independent Legal and Tax Advice. Grantee acknowledges that the Company has advised Grantee to obtain independent legal and tax advice regarding entering into this Agreement, the grant and exercise of the Option and the disposition of any shares of Common Stock acquired thereby.

     26. Notice. Any notice required or permitted to be delivered hereunder shall be deemed to be delivered only when actually received by the Company or by the Grantee, as the case may be, at the addresses set forth below, or at such other addresses as they have theretofore specified by written notice delivered in accordance herewith:

(a) Notice to the Company shall be addressed and delivered as follows:

	Endeavour International Corporation 1000 Main Street, Suite 3300 Houston, Texas 77002 Facsimile: (713) 307-8794 Attention: Corporate Secretary
(b)	Notice to the Grantee shall be addressed and delivered as set forth on the signature page.

     27. Tax Requirements.

          (a) Tax Withholding. The Company shall have the power and the right to deduct or withhold, or require the Grantee to remit to the Company, an amount sufficient to satisfy the amount of federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of the Agreement and this Option.

          (b) Share Withholding. With respect to tax withholding required upon the exercise of Stock Options or upon any other taxable event arising as a result of the Stock Option, Grantee may elect, subject to the approval of the Committee in its discretion, to

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satisfy the withholding requirement, in whole or in part, by having the Company withhold shares of Common Stock having a fair market value on the date the tax is to be determined equal to the statutory total tax which could be imposed on the transaction. All such elections shall be made in writing, signed by the Grantee, and shall be subject to any restrictions or limitations that the Committee, in its discretion, deems appropriate. Any fraction of a share of Common Stock required to satisfy such obligation shall be disregarded and the amount due shall instead be paid in cash by the Grantee.

[Signature Page Follows]

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     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and the Grantee, to evidence his consent and approval of all the terms hereof, has duly executed this Agreement, effective as of the date specified in Section 1 hereof.

COMPANY:
ENDEAVOUR INTERNATIONAL
CORPORATION
By:	/s/ Don Teague
Name:
Title:

GRANTEE:

/s/ J. Michael Kirksey

J. Michael Kirksey

Address:

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EX-10.34

Exhibit 10.34

ENDEAVOUR INTERNATIONAL CORPORATION
NONSTATUTORY STOCK OPTION AGREEMENT

     THIS NONSTATUTORY STOCK OPTION AGREEMENT (this “Agreement”) is made and entered into by and between Endeavour International Corporation (the “Company”), and John G. Williams (“Grantee”), an employee of the Company effective as of the Date of Grant as defined below.

     WHEREAS, Grantee shall be an employee of the Company on October 1, 2007, and as an inducement for such employment and in connection with such employment, the Compensation Committee of the Board of Directors of the Company, on behalf of the Company, authorized a grant to Grantee of a nonstatutory stock option to purchase the Company’s common stock, par value $.001 per share (the “Common Stock”), effective October 1, 2007, in the amount indicated below, which shall be subject to the terms and conditions of this Agreement, with a view to increasing Grantee’s interest in the Company’s welfare and growth; and

     WHEREAS, Grantee desires to receive such a nonstatutory option to purchase shares of Common Stock as an inducement for his employment and in connection with his employment with the Company.

     NOW, THEREFORE, in consideration of the premises, mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:

     1. Grant of Nonstatutory Stock Option. Subject to the restrictions, forfeiture provisions and other terms set forth herein, the Company hereby grants to the Grantee an option (the “Option” or “Stock Option”) to purchase 200,000 full shares (the “Optioned Shares”) of Common Stock at an “Option Price” equal to $1.14 per share. The Date of Grant of this Stock Option is October 1, 2007.

     The “Option Period” shall commence on the Date of Grant and shall expire on the date immediately preceding the fifth (5^th) anniversary of the Date of Grant. This Stock Option is a Nonstatutory Stock Option.

     2. Administration. This Agreement and the grant of the Option are subject to administration by and the rules and procedures established by the “Committee” (as defined herein) to administer this Agreement. The Committee shall mean the members of the compensation committee of the Board who are independent members of the compensation committee of the Board and who at least constitute a majority thereof, or if no such members are available, a majority of the independent members of the Board. The Committee shall have the authority to construe and interpret the terms of this Agreement and to provide omitted terms or definitions of terms to carry out this Agreement. The Committee shall have the authority to take all actions that it deems advisable for the administration of this Agreement. Any decision of the Committee in connection with this Agreement shall be final, binding and conclusive on the parties hereto and any third parties, including any individual or entity.

     3. Vesting: Time of Exercise. Except as specifically provided in this Agreement, the Stock Option shall be vested and exercisable as follows:

     (a) With respect to 33.3% of the total Optioned Shares, the Stock Option shall vest and become exercisable on October 1, 2008, provided the Grantee is employed by the Company or a subsidiary on that date.

     (b) With respect to 33.3% of the total Optioned Shares, the Stock Option shall vest and become exercisable on October 1, 2009, provided the Grantee is employed by the Company or a subsidiary on that date.

     (c) With respect to 33.3% of the total Optioned Shares, the Stock Option shall vest and become exercisable on October 1, 2010, provided the Grantee is employed by the Company or a subsidiary on that date.

     (d) Grantee shall become 100% vested in the total Optioned Shares hereunder on the day preceding an event which constitutes a Change in Control.

     For purposes of this Agreement, a “Change in Control” shall mean the occurrence of any of the following events:

     (i) the Company (A) shall not be the surviving entity in any merger, consolidation or other reorganization (or survives only as a subsidiary of an entity other than a previously wholly-owned subsidiary of the Company) or (B) is to be dissolved and liquidated, and as a result of or in connection with such transaction, the persons who were directors of the Company before such transaction shall cease to constitute a majority of the Board, or

     (ii) any person or entity, including a “group” as contemplated by Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, acquires or gains ownership or control (including, without limitation, power to vote) of 30% or ore of the outstanding shares of the Company’s voting stock (based upon voting power), and as a result of or in connection with such transaction, the persons who were directors of the Company before such transaction shall cease to constitute a majority of the Board, or

     (iii) the Company sells all or substantially all of the assets of the Company to any other person or entity (other than a wholly-owned subsidiary of the Company) in a transaction that requires shareholder approval pursuant to applicable corporate law; or

     (iv) During a period of two consecutive calendar years, individuals who at the beginning of such period constitute the Board, and any new director(s) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least a majority of the directors then still in office, who either were directors at the beginning of the two (2) year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board; or

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     (v) any other event that a majority of the Board, in its sole discretion, shall determine constitutes a Change in Control hereunder.

     4. Term; Forfeiture. In the event of Grantee’s termination of employment with the Company and its affiliates (a “Termination of Employment”) for any reason (including for cause) other than Grantee’s death, disability or retirement, the Option outstanding on such date of Termination of Employment, to the extent vested on such date, may be exercised by Grantee (or, in the event of Grantee’s subsequent death, by Grantee’s Heir (as defined below)) within three months following such Termination of Employment, but not thereafter. In the event that, as a result of such Termination of Employment, Grantee is eligible to receive severance benefits under any Company plan, program or severance agreement, the Option outstanding on such date of Termination of Employment, to the extent vested on such date, may be exercised by Grantee (or, in the event of Grantee’s subsequent death, by Grantee’s Heir (as defined below)) within twelve months following such Termination of Employment, but not thereafter. However, in no event shall the Option be exercisable after the fifth (5^th) anniversary of the Grant Date. To the extent the Option is not vested on Grantee’s date of Termination of Employment, the Option shall automatically lapse and be canceled unexercised as of such date.

     In the event of Grantee’s Termination of Employment by reason of death, disability or retirement, as determined by the Committee in its sole discretion, the Option shall be fully vested on such date of termination and may be exercised by Grantee or, in the event of Grantee’s death, by the person to whom Grantee’s rights shall pass by will or the laws of descent and distribution (“Heir”), at any time within the two-year period beginning on Grantee’s Termination of Employment, but not thereafter. However, in no event shall the Option be exercisable after the fifth (5^th) anniversary of the Grant Date.

     5. Who May Exercise. Subject to the terms and conditions set forth in Sections 3 and 4 above, during the lifetime of the Grantee, the Stock Option may be exercised only by the Grantee, or by the Grantee’s guardian or personal or legal representative (in the event of his or her Disability or by a broker dealer subject to Section 7 below).

     6. No Fractional Shares. The Stock Option may be exercised only with respect to full shares, and no fractional share of stock shall be issued.

     7. Manner of Exercise. Subject to such administrative regulations as the Committee may from time to time adopt, the Option may be exercised by the delivery of written notice to the Committee or designated Company representative setting forth the number of shares of Common Stock with respect to which the Option is to be exercised, the date of exercise thereof (the “Exercise Date”) which shall be at least three (3) days after giving such notice unless an earlier time shall have been mutually agreed upon. On the Exercise Date, the Grantee shall deliver to the Company consideration with a value equal to the total Option Price of the shares to be purchased, payable to the Company in full in either: (i) in cash or its equivalent, or (ii) subject to prior approval by the Committee in its discretion, by tendering previously acquired shares of Common Stock having an aggregate fair market value at the time of exercise equal to the total Option Price (provided that the shares of Common Stock which are tendered must have been held by the Grantee for at least six (6) months prior to their tender to satisfy the Option Price), or (iii) subject to prior approval by the Committee in its discretion, by withholding shares of

3

Common Stock which otherwise would be acquired on exercise having an aggregate fair market value at the time of exercise equal to the total Option Price, or (iv) subject to prior approval by the Committee in its discretion, by a combination of (i), (ii), and (iii) above. Any payment in shares of Common Stock shall be effected by the surrender of such shares to the Company in good form for transfer and shall be valued at their fair market value on the date when the Stock Option is exercised. Unless otherwise permitted by the Committee in its discretion, the Grantee shall not surrender, or attest to the ownership of, shares of Common Stock in payment of the Option Price if such action would cause the Company to recognize compensation expense (or additional compensation expense) with respect to the Option for financial reporting purposes.

     The Committee, in its discretion, also may allow the Option Price to be paid with such other consideration as shall constitute lawful consideration for the issuance of shares of Common Stock (including, without limitation, effecting a “cashless exercise” with a broker of the Option), subject to applicable securities law restrictions and tax withholdings, or by any other means which the Committee determines to be consistent with the Agreement’s purpose and applicable law. A “cashless exercise” of an Option is a procedure by which a broker provides the funds to the Grantee to effect an Option exercise, to the extent consented to by the Committee in its discretion. At the direction of the Grantee, the broker will either (i) sell all of the shares of Common Stock received when the Option is exercised and pay the Grantee the proceeds of the sale (minus the Option Price, withholding taxes and any fees due to the broker) or (ii) sell enough of the shares of Common Stock received upon exercise of the Option to cover the Option Price, withholding taxes and any fees due the broker and deliver to the Grantee (either directly or through the Company) a stock certificate for the remaining shares of Common Stock. Dispositions to a broker effecting a cashless exercise are not exempt under Section 16 of the Exchange Act. In no event will the Committee allow the Option Price to be paid with a form of consideration, including a loan or a “cashless exercise,” if such form of consideration would violate the Sarbanes-Oxley Act of 2002 as determined by the Committee in its discretion.

     As soon as practicable after receipt of a written notification of exercise and full payment, the Company shall deliver, or cause to be delivered, to or on behalf of the Grantee, in the name of the Grantee or other appropriate recipient, share certificates for the number of shares of Common Stock purchased under the Option. Such delivery shall be effected for all purposes when the Company or a stock transfer agent of the Company shall have deposited such certificates in the United States mail, addressed to Grantee or other appropriate recipient.

     If the Grantee fails to pay for any of the shares of Common Stock specified in such notice or fails to accept delivery thereof, then the Option, and right to purchase such shares of Common Stock may be forfeited by the Company.

     8. Nonassignability. The Stock Option is not assignable or transferable by the Grantee except by will or by the laws of descent and distribution or pursuant to a domestic relations order that would qualify as a qualified domestic relations order as defined in Section 414(p) of the Code, if such provision were applicable to the Stock Option.

     9. Rights as Stockholder. The Grantee will have no rights as a stockholder with respect to any shares covered by the Stock Option until the issuance of a certificate or certificates to the Grantee for the Optioned Shares. The Optioned Shares shall be subject to the terms and

4

conditions of this Agreement regarding such shares. Except as otherwise provided in Section 10 hereof, no adjustment shall be made for dividends or other rights for which the record date is prior to the issuance of such certificate or certificates.

     10. Adjustment of Number of Optioned Shares and Related Matters. In the event that any dividend or other distribution (whether in the form of cash, Common Stock, or other property), recapitalization, forward or reverse split, reorganization, merger, consolidation, spin-off, combination, repurchase, share exchange, liquidation, dissolution or other similar transaction or event affects the Common Stock such that an adjustment is determined by the Committee to be appropriate under this Agreement, then the Committee may make adjustments to this Agreement and the Optioned Shares in accordance with applicable laws as it may deem equitable.

     11. Community Property. Each spouse individually is bound by, and such spouse’s interest, if any, in any share of Common Stock is subject to, the terms of this Agreement. Nothing in this Agreement shall create a community property interest where none otherwise exists.

     12. Dispute Resolution.

     (a) Arbitration. All disputes and controversies of every kind and nature between any parties hereto arising out of or in connection with this Agreement or the transactions described herein as to the construction, validity, interpretation or meaning, performance, non-performance, enforcement, operation or breach, shall be submitted to arbitration pursuant to the following procedures:

     (i) After a dispute or controversy arises, any party may, in a written notice delivered to the other parties to the dispute, demand such arbitration. Such notice shall designate the name of the arbitrator (who shall be an impartial person) appointed by such party demanding arbitration, together with a statement of the matter in controversy.

     (ii) Within 30 days after receipt of such demand, the other parties shall, in a written notice delivered to the first party, name such parties’ arbitrator (who shall be an impartial person). If such parties fail to name an arbitrator, then the second arbitrator shall be named by the American Arbitration Association (the “AAA”). The two arbitrators so selected shall name a third arbitrator (who shall be an impartial person) within 30 days, or in lieu of such agreement on a third arbitrator by the two arbitrators so appointed, the third arbitrator shall be appointed by the AAA. If any arbitrator appointed hereunder shall die, resign, refuse or become unable to act before an arbitration decision is rendered, then the vacancy shall be filled by the method set forth in this Section for the original appointment of such arbitrator.

     (iii) Each party shall bear its own arbitration costs and expenses. The arbitration hearing shall be held in Houston, Texas at a location designated by a majority of the arbitrators. The Commercial Arbitration Rules of the American

5

Arbitration Association shall be incorporated by reference at such hearing and the substantive laws of the State of Texas (excluding conflict of laws provisions) shall apply.

     (iv) The arbitration hearing shall be concluded within ten (10) days unless otherwise ordered by the arbitrators and the written award thereon shall be made within fifteen (15) days after the close of submission of evidence. An award rendered by a majority of the arbitrators appointed pursuant to this Agreement shall be final and binding on all parties to the proceeding, shall resolve the question of costs of the arbitrators and all related matters, and judgment on such award may be entered and enforced by either party in any court of competent jurisdiction.

     (v) Except as set forth in Section 12(b) below, the parties stipulate that the provisions of this Section shall be a complete defense to any suit, action or proceeding instituted in any federal, state or local court or before any administrative tribunal with respect to any controversy or dispute arising out of this Agreement or the transactions described herein. The arbitration provisions hereof shall, with respect to such controversy or dispute, survive the termination or expiration of this Agreement.

     No party to an arbitration may disclose the existence or results of any arbitration hereunder without the prior written consent of the other parties; nor will any party to an arbitration disclose to any third party any confidential information disclosed by any other party to an arbitration in the course of an arbitration hereunder without the prior written consent of such other party.

     (b) Emergency Relief. Notwithstanding anything in this Section 12 to the contrary, any party may seek from a court any provisional remedy that may be necessary to protect any rights or property of such party pending the establishment of the arbitral tribunal or its determination of the merits of the controversy or to enforce a party’s rights under Section 12.

     13. Grantee’s Representations. Notwithstanding any of the provisions hereof, the Grantee hereby agrees that he will not exercise the Stock Option granted hereby, and that the Company will not be obligated to issue any shares to the Grantee hereunder, if the exercise thereof or the issuance of such shares of Common Stock shall constitute a violation by the Grantee or the Company of any provision of any law or regulation of any governmental authority or Company policies, or the rules of the stock exchange on which the Common Stock is listed or traded. Any determination in this connection by the Company shall be final, binding, and conclusive. The obligations of the Company and the rights of the Grantee are subject to all applicable laws, rules, and regulations, rules of the stock exchange on which the Common Stock is listed or traded and policies of the Company.

     14. Investment Representation. The Grantee represents and warrants to the Company that all Common Stock which may be purchased hereunder will be acquired by the Grantee for

6

investment purposes for his own account and not with any intent for resale or distribution in violation of federal or state securities laws.

     15. Grantee’s Acknowledgments. The Grantee represents that he or she is familiar with the terms and provisions of this Agreement, and hereby accepts this Option subject to all the terms and provisions thereof. The Grantee hereby agrees to accept as binding, conclusive, and final all decisions or interpretations of the Committee, the Company or the Board, as appropriate, upon any questions arising under this Agreement.

     16. Law Governing. This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Texas (excluding any conflict of laws rule or principle of Texas law that might refer the governance, construction, or interpretation of this agreement to the laws of another state).

     17. No Right to Continue Service or Employment. Nothing herein shall be construed to confer upon the Grantee the right to be employed or to provide services to the Company, its affiliates or any parent or subsidiary or their affiliates, whether as an employee or as a consultant or as a director of the Board, or interfere with or restrict in any way the right of the Company or any of the other foregoing entities to discharge the Grantee as an employee, consultant or director of the Board at any time.

     18. Legal Construction. In the event that any one or more of the terms, provisions, or agreements that are contained in this Agreement shall be held by a court of competent jurisdiction to be invalid, illegal, or unenforceable in any respect for any reason, the invalid, illegal, or unenforceable term, provision, or agreement shall not affect any other term, provision, or agreement that is contained in this Agreement and this Agreement shall be construed in all respects as if the invalid, illegal, or unenforceable term, provision, or agreement had never been contained herein.

     19. Covenants and Agreements as Independent Agreements. Each of the covenants and agreements that is set forth in this Agreement shall be construed as a covenant and agreement independent of any other provision of this Agreement. The existence of any claim or cause of action of the Grantee against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of the covenants and agreements that are set forth in this Agreement.

     20. Entire Agreement. This Agreement supersedes any and all other prior understandings and agreements, either oral or in writing, between the parties with respect to the subject matter hereof and constitute the sole and only agreements between the parties with respect to the said subject matter. All prior negotiations and agreements between the parties with respect to the subject matter hereof are merged into this Agreement. Each party to this Agreement acknowledges that no representations, inducements, promises, or agreements, orally or otherwise, have been made by any party or by anyone acting on behalf of any party, which are not embodied in this Agreement and that any agreement, statement or promise that is not contained in this Agreement shall not be valid or binding or of any force or effect.

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     21. Parties Bound. The terms, provisions, and agreements that are contained in this Agreement shall apply to, be binding upon, and inure to the benefit of the parties and their respective heirs, executors, administrators, legal representatives, and permitted successors and assigns, subject to the limitation on assignment expressly set forth herein.

     22. Modification. No change or modification of this Agreement shall be valid or binding upon the parties unless the change or modification is in writing and signed by the parties.

     23. Headings. The headings that are used in this Agreement are used for reference and convenience purposes only and do not constitute substantive matters to be considered in construing the terms and provisions of this Agreement.

     24. Gender and Number. Words of any gender used in this Agreement shall be held and construed to include any other gender, and words in the singular number shall be held to include the plural, and vice versa, unless the context requires otherwise.

     25. Independent Legal and Tax Advice. Grantee acknowledges that the Company has advised Grantee to obtain independent legal and tax advice regarding entering into this Agreement, the grant and exercise of the Option and the disposition of any shares of Common Stock acquired thereby.

     26. Notice. Any notice required or permitted to be delivered hereunder shall be deemed to be delivered only when actually received by the Company or by the Grantee, as the case may be, at the addresses set forth below, or at such other addresses as they have theretofore specified by written notice delivered in accordance herewith:

(a)	Notice to the Company shall be addressed and delivered as follows:
	Endeavour International Corporation
	1000 Main Street, Suite 3300
	Houston, Texas 77002
	Facsimile: (713) 307-8794
	Attention: Corporate Secretary

     (b) Notice to the Grantee shall be addressed and delivered as set forth on the signature page.

     27. Tax Requirements.

     (a) Tax Withholding. The Company shall have the power and the right to deduct or withhold, or require the Grantee to remit to the Company, an amount sufficient to satisfy the amount of federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of the Agreement and this Option.

     (b) Share Withholding. With respect to tax withholding required upon the exercise of Stock Options or upon any other taxable event arising as a result of the Stock Option, Grantee may elect, subject to the approval of the Committee in its discretion, to

8

satisfy the withholding requirement, in whole or in part, by having the Company withhold shares of Common Stock having a fair market value on the date the tax is to be determined equal to the statutory total tax which could be imposed on the transaction. All such elections shall be made in writing, signed by the Grantee, and shall be subject to any restrictions or limitations that the Committee, in its discretion, deems appropriate. Any fraction of a share of Common Stock required to satisfy such obligation shall be disregarded and the amount due shall instead be paid in cash by the Grantee.

[Signature Page Follows]

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     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and the Grantee, to evidence his consent and approval of all the terms hereof, has duly executed this Agreement, effective as of the date specified in Section 1 hereof.

COMPANY:
ENDEAVOUR INTERNATIONAL CORPORATION
By:	/s/ Don Teagye
Name:	Don Teague
Title:	Executive Vice President and
	General Counsel
GRANTEE:
/s/ John G. Williams
John G. Williams
Address:

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EX-14.1

Exhibit 14.1

Endeavour International Corporation
Code of Business Conduct

At Endeavour, we conduct our business with the highest degree of honesty and ethical behavior. These standards are the cornerstone of our work. We are direct, clear, and ethical in our communications and actions. We speak with honesty, courage, and care. We are accountable for our words, our work, and our processes, which lead to a challenging and rewarding work environment.

This handbook sets forth Endeavour’s fundamental business values. It is by no means an exhaustive account, but rather a summary of some of the basic standards that underlie our business ethics and professional integrity; standards that apply to all Endeavour employees. All employees are responsible for familiarizing themselves with all corporate policies.

After reading this handbook, we encourage you to discuss its content with others and to ask questions if any items are not completely clear. Should you know of any events or transactions that violate these policies, your responsibility is to communicate the information promptly to your manager, or the managers of the Audit or Legal departments. Understanding, communicating, and working together are what make our policies effective and our workplace outstanding.

William L. Transier,

Chairman, President and Chief Executive Officer
Endeavour International Corporation

CONTENTS

COMPLIANCE IS SERIOUS BUSINESS	3
REPORTING POSSIBLE VIOLATIONS OF POLICIES	4
DISCIPLINARY ACTIONS	5
YOUR RESPONSIBILITIES TO ENDEAVOUR AND ITS SHAREHOLDERS	6
Equal Opportunity	6
Conflicts of Interest	7
Gifts & Entertainment
Outside Employment
Outside Directorships
Business Interests
Related Parties
Other Situations
Disclosure
Protecting Endeavour’s Confidential Information	9
The Confidential Information Agreement
Disclosure of Confidential Information
Obligations Under Securities Laws—“Insider” Trading	10
Disclosure to SEC and Other Public Communications
“Insider” Trading
Obligations Under Other Laws	10
Use of Endeavour’s Assets	11
General
Computers and Other Equipment
Software
Use of E-mail
Use of the Internet
Maintaining and Managing Financial Records	13
Payment Practices	14
Accounting Practices
Political Contributions
Vendors, Contractors, and Consultants
Approval Limitations
RESPONSIBILITIES TO OUR SUPPLIERS, AND CONTRACTORS	15
Payments or Gifts from Others	15
Handling the Confidential Information of Others	16
Need-to-Know
Notes and Reports
ANNUAL FILING AND DISCLOSURE REQUIREMENTS	17
Annual Filing	17
Disclosing Amendments and Waivers	17
ACKNOWLEDGEMENT AND CERTIFICATION	18
A FINAL WORD	19
APPENDIX A – FOREIGN CORRUPT PRACTICES ACT

ENDEAVOUR CODE OF BUSINESS CONDUCT

COMPLIANCE IS SERIOUS BUSINESS

Endeavour’s policies about honest and ethical business conduct reflect the kind of company we strive to be. A fundamental responsibility of being an Endeavour employee is respecting and adhering to our policies. Many Endeavour policies also reflect the requirements of laws or regulations. Policy violations can create significant liability for Endeavour, its directors, officers, and employees. Liabilities may result in monetary damages and may even threaten our ability to continue to do business.

In trying to determine whether any given action is appropriate, do not hesitate to ask your manager or the managers of the Finance or Legal departments.

You will be required to certify on the form provided at the end of this Code of Business Conduct that you have received, read and understand this Code of Business Conduct and that you have complied and that you will continue to comply with this Code of Business Conduct. The signed form will be placed in your personnel file for permanent reference.

ENDEAVOUR CODE OF BUSINESS CONDUCT

REPORTING POSSIBLE VIOLATIONS OF POLICIES

If you know of or suspect any conduct which you believe to be inconsistent with Endeavour’s policies or in violation of the law, you are obligated to promptly report it to one of the following:

• your manager

• the managers of the Finance or Legal departments.

ENDEAVOUR CODE OF BUSINESS CONDUCT

DISCIPLINARY ACTIONS

The matters covered in this Code of Business Conduct, are of the utmost importance to Endeavour, its stockholders, and its business partners, and are essential to Endeavour’s ability to conduct business in accordance with its stated values. We expect all of our directors, officers, employees, contractors, and consultants to adhere to these rules in carrying out their duties for Endeavour. For the purposes of this Code of Business Conduct, an “employee” shall include an Endeavour director or officer.

Endeavour will take appropriate action against any employee, contractor, or consultant whose actions are found to violate these policies or any other of Endeavour’s specific policies. Disciplinary actions may include immediate termination of employment or business relationship, at Endeavour’s discretion. Where Endeavour has suffered a loss, it will pursue its remedies against the individuals or entities responsible. Where laws have been violated, Endeavour will cooperate fully with the appropriate authorities. This Code of Business Conduct does not alter an employee’s at-will relationship with Endeavour.

ENDEAVOUR CODE OF BUSINESS CONDUCT

YOUR RESPONSIBILITIES TO ENDEAVOUR AND ITS STOCKHOLDERS

Equal Opportunity

Endeavour’s values include ethical actions, honesty, respect for others, and teamwork. Their exercise requires an environment that is open, supportive, and interdependent. No action could be more contrary to our values than discrimination.

Our policies prohibit discrimination and harassment of any kind. Each of us needs to meet this obligation. Discrimination, harassment, slurs, or jokes based on a person’s race, color, creed, religion, national origin, citizenship, age, sex, marital status, or mental or physical disability will not be tolerated. This applies to every Endeavour employee and contractor.

ENDEAVOUR CODE OF BUSINESS CONDUCT

YOUR RESPONSIBILITIES TO ENDEAVOUR AND ITS STOCKHOLDERS

Conflicts of Interest

Each of us has a responsibility to Endeavour, our stockholders, and each other. Although this duty does not prevent us from engaging in personal transactions and investments, it does demand that we avoid situations where a conflict of interest may occur or appear to occur. Endeavour is subject to scrutiny from many different individuals and organizations. We should always strive to avoid even the appearance of impropriety.

There are several situations that may result in a conflict of interest. The most common include:

• Accepting gifts and/or entertainment from suppliers, contractors, or other third parties with which Endeavour does business.

• Being employed by another company while still an Endeavour employee.

• Serving as a director on a competitor’s board.

• Owning a significant part of or participating in another company or business.

• Communicating with competitors.

• Having close family relationships with outside suppliers, contractors, or consultants.

Consider these situations:

Gifts and Entertainment. It is not uncommon to receive gifts or entertainment from existing or potential suppliers and contractors. It is important to note, however, that in addition to increasing the cost of doing business, the receipt may lead to a perceived or actual conflict of interest. All gifts or entertainment received must be de minimis and must never be accepted prior to or immediately following the award of contracts. The gift or entertainment must never affect your motivations or decisions. You must disclose gift and entertainment opportunities to your manager or supervisor prior to accepting the gift or entertainment to better ensure transparency.

Outside Employment. You should not engage in any business outside of Endeavour if it interferes with your performance or responsibilities to the Company. Our policies prohibit any employee from simultaneous employment with an Endeavour supplier, customer, or competitor, and from taking part in any activity that enhances or supports a competitor’s position.

Outside Directorships. It is a conflict of interest to serve as a director of a company in competition with Endeavour. Although you may serve as a director of an Endeavour supplier, or customer, you must first obtain approval from the Company’s Chief Executive Officer before accepting a directorship, and any remuneration you receive should be of an amount equal to your responsibilities. If you serve as a director at the request of Endeavour, you should not accept any remuneration for service.

Business Interests. If you are considering investing in the business interests of customers, suppliers, and competitors, you must first take great care to ensure that these investments do not compromise your responsibilities to Endeavour. Many factors, including the size and nature of the investment, your ability to influence Endeavour decisions, your access to confidential information, and the nature of the relationship between Endeavour and the other business should be considered in determining whether a conflict situation exists. Typically, investments of less than two (2) percent of the total outstanding shares in companies listed on a national or international securities exchange, or quoted daily by NASDAQ or any other board, do not create a conflict. You must first obtain approval from the Company’s Chief Executive Officer prior to investing in the business interests of customers, suppliers and competitors.

ENDEAVOUR CODE OF BUSINESS CONDUCT

YOUR RESPONSIBILITIES TO ENDEAVOUR AND ITS STOCKHOLDERS

Conflicts of Interest (cont.)

Related Parties. As a general rule, you should avoid conducting Endeavour business with a family member or with a business in which a family member is associated in any significant role. If such a transaction is unavoidable, you must obtain prior approval from the Company’s Chief Executive Officer. It is imperative that any dealings with a related party should be conducted in such a way that no actual or perceived preferential treatment is given to this business that would not otherwise be given to another business.

Other Situations. Because other conflicts of interest may arise, it would be impractical to attempt to list all possible situations. If a proposed transaction or situation raises any questions or doubts in your mind, you should ask your manager or the managers in the Finance, Legal, or Human Resources departments before entering into the relationship or situation in question.

Disclosure. Each employee will be required to disclose any potential conflicts of interest and attest to complying with the Foreign Corrupt Practices Act. The Company’s policies relating to the Foreign Corrupt Practices Act are attached as Appendix A hereto.

ENDEAVOUR CODE OF BUSINESS CONDUCT

YOUR RESPONSIBILITIES TO ENDEAVOUR AND ITS STOCKHOLDERS

Protecting Endeavour’s Confidential Information

Endeavour’s confidential and proprietary information is a valuable asset and includes but is not limited to prospective acquisition and divestiture activity, certain seismic interpretation, business strategies and tactics, and undisclosed financial information. Every employee has the responsibility to safeguard the information and never disclose it prematurely.

The Confidential Information Agreement. When you joined Endeavour, you signed an agreement to protect and hold confidential our proprietary information. This agreement remains in effect for as long as you work for Endeavour and even after you leave the Company. Under this agreement, you may not disclose Endeavour’s confidential information to anyone or use it to benefit anyone other than Endeavour without the Company’s prior written consent. Abiding by this agreement is a fundamental condition of your employment, and you should take its provisions very seriously.

Disclosure of Confidential Information. To further Endeavour’s business, from time to time our proprietary information must be disclosed to potential business partners. However, such disclosure should never be done without carefully considering its potential benefits and risks. If you determine in consultation with your manager and other appropriate Endeavour management that disclosure of confidential information is necessary, you must then contact the Legal Department to ensure that an appropriate written nondisclosure agreement has been signed by all parties—before any disclosure takes place. Additionally, no financial information other than that required by statutory-reporting requirements may be disclosed without the prior approval of the Company’s Chief Financial Officer. Never accept a third party’s nondisclosure agreement without reviewing it with the Legal Department.

Specific policies have also been established regarding who may communicate information to the press and the financial analyst community. All inquiries or calls from the press should be referred to the Company’s Vice President of Investor Relations.

Computing Security. All employees and contractors of Endeavour are expected to maintain a safe and secure computing environment in compliance with Sarbanes-Oxley regulations. Whether you are a basic user, system or data owner, or an administrator, it is your obligation to understand your network security role and the responsibilities associated with computer access. Every step should be taken to ensure the confidentiality of information through the use of passwords as outlined in the company’s computer policies and procedures. Employees should be diligent in protecting data and informational assets in the public domain and recognize the threat of theft.

ENDEAVOUR CODE OF BUSINESS CONDUCT

YOUR RESPONSIBILITIES TO ENDEAVOUR AND ITS STOCKHOLDERS

Obligations Under Securities Laws

Disclosure to SEC and Other Public Communications. Disclosure in reports and documents that Endeavour files with, or submits to, the Securities and Exchange Commission and in other public communications made by Endeavour shall be full, fair, accurate and timely.

“Insider Trading.” From time to time, you may have access to information about Endeavour’s business that has not been disclosed to our stockholders and the investing public. Material undisclosed information about Endeavour’s business is called “inside” information and can include financial information, acquisition or divestiture plans, or other information that could affect the share price of our stock. Trading stock on the basis of inside information, regardless of how small or large the trade, is a serious violation of U.S. securities laws and, depending on the circumstances, the laws of other countries. This is true regardless of where in the world you reside. If you have material inside information about Endeavour, you may not trade in Endeavour stock from the moment you receive that information until after the close of the second trading day following public disclosure of the information. Additionally, you must not assist anyone else to trade in Endeavour stock by improperly disclosing inside information to him or her.

Insider trading rules are strictly enforced and can carry severe penalties, even in instances when the financial transactions seem small. Please contact the Legal Department if you are unsure as to whether or not you are free to trade.

A final word on stock trading. Investors who sell shares of stock they do not own, hoping the stock will drop in value so they can repurchase it at a lower price, are said to be “short selling.” This “betting against the Company” can sometimes have a detrimental impact on the stock price. As employees, we all have a stake in Endeavour’s success and can be hurt by short-selling activity. Additionally, since short selling is sometimes illegal and is highly speculative, it may be subject to greater scrutiny by the Securities and Exchange Commission.

Obligations Under Other Laws

All Endeavour employees and agents shall comply with all applicable legal requirements, including but not limited to, applicable governmental laws, rules and regulations.

ENDEAVOUR CODE OF BUSINESS CONDUCT

YOUR RESPONSIBILITIES TO ENDEAVOUR AND ITS STOCKHOLDERS

Use of Endeavour’s Assets

General. Protecting Endeavour’s assets is a key fiduciary responsibility of every employee. Care should be taken to ensure that assets are not misappropriated, loaned to others, sold or donated without proper authorization.

Computers and Other Equipment. Endeavour strives to furnish all employees with the equipment necessary to efficiently and effectively do their jobs. You have the obligation to care for that equipment and to use it responsibly. If you use Endeavour equipment at your home or off site, take precautions to protect it from theft or damage, just as if it were your own. At the end of your employment at Endeavour, you must immediately return all Company-owned equipment.

Software. All software used by employees to conduct Endeavour business must be authorized copies. Never make or use illegal or unauthorized copies of any software, whether in the office, at home, or off site, since doing so constitutes copyright infringement and may expose you and Endeavour to potential civil and criminal liability.

Use of E-mail. E-mail is a convenient, fast, and effective way to communicate with other employees and business partners. Irresponsible, careless, or insensitive statements in an e-mail can be taken out of context and used against you and the Company. Similarly, disparaging comments made against others could, under certain circumstances, constitute libel or a form of harassment. E-mail must only be used appropriately and professionally.

Please observe the following simple rules when preparing and sending e-mails:

• Think carefully about what you wish to say. Avoid loose statements, unfounded assertions, angry responses, threats, speculations, or suppositions about the actions of Endeavour, its employees, or third parties.

• Label e-mail messages containing confidential information appropriately (e.g. confidential, attorney-client communication). This tells the recipient how to treat the information in your message.

• Copy only those persons on an e-mail who need to know what you are saying in order to do their jobs.

• Keep in mind that e-mail messages can be, and usually are, subpoenaed in the event of litigation—even if Endeavour is not a party to the lawsuit. Excepted are communications between attorney and client: if you need to address a sensitive legal question to a member of the Endeavour Legal Department, label the e-mail “Attorney-Client Confidential” in the subject heading and do not copy anyone unless requested to do so by the attorney. Of course, not all messages require this procedure. When in doubt, call the Legal Department to discuss how to proceed.

Remember also that your Endeavour e-mail account is established to conduct Endeavour’s business and enhance your productivity. E-mail sent or received on Endeavour’s e-mail system is the property of Endeavour.

Please observe these additional guidelines when using Endeavour e-mail:

• E-mail should not be used to further personal business opportunities or perform work for anyone other than Endeavour.

ENDEAVOUR CODE OF BUSINESS CONDUCT

YOUR RESPONSIBILITIES TO ENDEAVOUR AND ITS STOCKHOLDERS

Use of Endeavour’s Assets (cont.)

• E-mail must never be used to send or receive unlawful, obscene, or offensive messages or files.

• E-mail must not be used to engage in political activities, to express personal opinions to journalists or to take public positions on issues without the prior consent of Endeavour management.

Use of the Internet. Use of the Internet and its effect on business is still unfolding, obliging all of us to use it responsibly to conduct Endeavour business and to enhance our expertise and productivity. Please remember that any screen display or printout of any subject, article, or Web page you access via the Internet can be viewed by others just as they might view a poster on your wall. Care should be taken to neither access nor display any offensive materials, which might be deemed a form of harassment as described in the Equal Opportunity section of this document.

ENDEAVOUR CODE OF BUSINESS CONDUCT

YOUR RESPONSIBILITIES TO ENDEAVOUR AND ITS STOCKHOLDERS

Maintaining and Managing Records

Keeping accurate books and records, and retaining them for retrieval, is an important part of our daily business. In fact, various laws require that records be accurate and that they be kept for minimum periods of time. Periodically disposing of documents that are no longer useful and do not need to be retained is just as important as knowing when to save information.

ENDEAVOUR CODE OF BUSINESS CONDUCT

YOUR RESPONSIBILITIES TO ENDEAVOUR AND ITS SHAREHOLDERS

Payment Practices

Accounting Practices. Endeavour’s responsibilities to its shareholders and the investing public, as well as its obligations under the laws governing corporations, require that all transactions be fully and accurately recorded in the Company’s books and records. False or misleading entries, unrecorded funds or assets, or payments without appropriate supporting documentation and approval are strictly prohibited. Such items violate Endeavour policy and the law. Financial entries should be processed in a timely manner and all supporting documentation should fully and accurately describe the nature of the transaction. Endeavour will provide prompt processing for reimbursing employees and vendors.

In addition to maintaining complete and accurate records, the Foreign Corrupt Practices Act (FCPA) states that it is a Federal crime for any U.S. business enterprise to offer a gift, payment or bribe, or anything else of value, whether directly or indirectly, to any foreign official, political party or party official, or candidate for foreign political office for the purpose of influencing, obtaining, retaining, or directing business to Endeavour or to any other party. Even if the payment is legal in the host country, it is forbidden by the Act and violates U.S. law.

Political Contributions. Endeavour reserves the right to communicate its position on important issues to elected representatives and other government officials, and the Company encourages its employees to exercise their civic rights and responsibilities. However, Endeavour’s funds or assets must not be used for, or contributed to, political campaigns or political practices without the prior written approval of the Company’s Chief Executive Officer or Chief Financial Officer.

Vendors, Contractors, and Consultants. Endeavour relies extensively on third parties to conduct its operations. Our relationships with them must always be proper, lawful, and documented, in fact and in appearance, wherever in the world they occur.

Contractual obligations must be set forth in a written agreement and must reflect the value to Endeavour of the service being provided. They should never exceed amounts that are reasonable and customary in our industry. The service to be provided must be legal and proper. Payments must never be made in cash and may only be made against an accurate and complete invoice.

Approval Limitations. Approval authorities have been established for conducting Endeavour business. All employees are expected to comply with the delegated approval authority.

ENDEAVOUR CODE OF BUSINESS CONDUCT

RESPONSIBILITIES TO OUR SUPPLIERS AND CONTRACTORS

Payments or Gifts from Others

Never solicit or accept gifts, loans, or any other favors from anyone who is doing business with Endeavour or who wishes to do business with Endeavour. The only appropriate exceptions are inexpensive gifts having a value of U.S. $100 or less, or even a lower amount depending on local custom. You may accept infrequent business meals and entertainment, provided they are not lavish, excessive, or of a nature which might create the appearance of impropriety.

Sometimes, local customs may require that you exchange more valuable gifts with suppliers or customers. While we strive to respect local customs, gifts of this nature should not be exchanged without first obtaining approval from your manager. In any event, you should turn the gift received over to Endeavour for appropriate disposition. The gift should always be appropriate to the circumstances and should never be of a kind that could create an appearance of impropriety. Its nature and cost must always be disclosed.

ENDEAVOUR CODE OF BUSINESS CONDUCT

RESPONSIBILITIES TO OUR SUPPLIERS AND CONTRACTORS

Handling the Confidential Information of Others

Endeavour has many types of business relationships with many companies and individuals. Sometimes, they will volunteer confidential information about their products or business plans to induce Endeavour to enter into a business relationship. At other times, we may request that a third party provide confidential information to permit the Company to evaluate a potential business relationship. Whatever the situation, we must take special care to handle the confidential information of others responsibly. The Legal Department can assist in drafting or reviewing third party confidentiality agreements.

Need-to-Know. Once a third party’s confidential information has been disclosed to Endeavour, we have an obligation to limit its use to the specific purpose for which it was disclosed and to disseminate it only to other Endeavour employees who need to know the information. Every employee involved in a potential business relationship with a third party must understand and strictly observe the restrictions on the use and handling of confidential information. When in doubt, consult the Legal Department.

Notes and Reports. When reviewing the confidential information of a third party under a nondisclosure agreement, it is natural to take notes or prepare reports summarizing the results of the review and, based partly on those notes or reports, to draw conclusions about the suitability of a business relationship. Notes or reports can include confidential information disclosed by the other party and should therefore be retained with other confidential documents and destroyed when appropriate.

ENDEAVOUR CODE OF BUSINESS CONDUCT

ANNUAL FILING AND DISCLOSURE REQUIREMENTS

Annual Filing

A copy of this Code of Business Conduct shall be filed as an exhibit to Endeavour’s report on Form 10-K or Form 10-KSB, as applicable.

Disclosing Amendments and Waivers

Amendments to, and waivers of, this Code of Business Conduct shall be disclosed within two business days after the amendment or waiver, either by filing a Form 8-K, or if Endeavour has disclosed in its annual report on Form 10-K or Form 10-KSB, as applicable, its intention to use its website for such purpose, by posting the disclosure on its corporate website; provided, however, that any waiver of this policy for a director or executive officer shall be approved by the Board of Directors or a committee of the Board of Directors. If posted on the website, the disclosure shall remain on the website for at least 12 months and be retained by Endeavour for five years.

Appendix A

ENDEAVOUR INTERNATIONAL CORPORATION

FCPA COMPLIANCE POLICY AND PROCEDURES

Policy

Purpose

The purpose of this policy and the related procedures is to provide detailed information and guidelines to help ensure compliance by the Company with the Foreign Corrupt Practices Act of 1977, as amended (“FCPA” or the “Act”). The FCPA:

• makes it illegal for US citizens and companies, their officers, directors, employees and agents, and any stockholders acting on their behalf, to bribe foreign officials; and

• requires US companies to keep accurate and complete books and records and to maintain proper internal accounting controls.

This policy and the related procedures provide details regarding the FCPA’s anti-bribery and record-keeping provisions and should be read in conjunction with the Company’s Code of Business Ethics and other general management policies.

Scope

This policy extends to all of the Company’s domestic and foreign operations, including operations conducted by any departments, subsidiaries, agents, consultants or other representatives, and, to the extent explained in this policy and the related procedures, the operations of any joint venture or other business enterprise outside the US in which the Company is a participant. This policy also extends to all of the Company’s financial record-keeping activities and is integrated with the obligations to which the Company is already subject by virtue of the federal and state securities laws.

Summary of the FCPA

The FCPA has two primary sections. The first section makes it illegal to bribe foreign officials, and the second section imposes record-keeping and internal accounting requirements upon publicly traded US companies like the Company.

1. Anti-bribery Provisions

a.	Prohibited Payments
	The FCPA’s anti-bribery provisions make it illegal to bribe foreign officials in order to obtain or retain business or to secure any improper advantage. Specifically, the FCPA prohibits payments, offers or gifts of money or anything of value, with corrupt intent, to a “foreign official.”
	For purposes of this policy and the related procedures, a “foreign official” is any officer or employee of a foreign government (ie, other than the US) or any department, agency, or instrumentality thereof (which includes a government-owned or government-controlled state enterprise) or of a

	“public international organization”, any person acting in an official capacity for or on behalf of a foreign government or government entity or of a public international organization, any foreign political party or party official, or any candidate for foreign political office. Thus foreign officials include not only elected officials, but also consultants who hold government positions, employees or companies owned by foreign governments, political party officials and others. The term “public international organization” includes such organizations as the World Bank, the International Finance Corporation, the International Monetary Fund, and the Inter-American Development Bank. The Company’s Executive Vice President, Administration, General Counsel and Secretary (“General Counsel”) should be contacted if there is a question as to whether an organization should be treated as a public international organization for purposes of this policy and the related procedures.
	Neither the Company nor any of its employees, agents or business partners shall make, promise or authorize any gift, payment or offer anything of value on behalf of the Company to a foreign official or to any third person (such as a consultant) who, in turn, is likely to make a gift, payment or offer anything of value to a foreign official. Personal funds must not be used to accomplish what is otherwise prohibited by Company policy.
	The procedures specifically outline the very limited circumstances – entertainment, meals, gifts of a nominal value and other business courtesies – when items of value can be given to foreign officials. Such entertainment, meals, gifts of a nominal value and other business courtesies must have prior written approval of the General Counsel.
b.	Permissible Payments
	The FCPA allows certain payments to foreign officials under very limited circumstances. “Facilitating” payments to foreign officials in order to obtain non-discretionary, routine governmental action, such as obtaining a permit to do business in a foreign country, obtaining policy protection, or processing a visa, customs invoice or other governmental paper are permitted under the FCPA. Various types of “promotional or marketing payments” may also be permissible under the FCPA in certain circumstances. For example, certain reasonable, bona fide expenses incurred while promoting the Company to foreign officials at a Company facility or entertaining employees of a foreign state-owned firm (such as a state-owned oil company) may also be legitimate expenses under the FCPA.
	Under this FCPA policy, Company employees or agents may make facilitating payments or promotional/marketing payments only after obtaining prior written approval from the General Counsel.

2.	Record-Keeping, Accounting and Payment Practices
	The record-keeping provisions of the FCPA require publicly held US companies such as the Company to keep their books, records and accounts in reasonable detail accurately and to reflect fairly all transactions and

	disposition of assets. Thus the Act prohibits the mischaracterization or omission of any transaction on a company’s books or any failure to maintain proper accounting controls that results in such mischaracterization or omission.
	Accordingly, Company employees must follow applicable standards, principles, laws and Company practices for accounting and financial reporting. Specifically, employees must be timely and complete when preparing all reports and records required by management. Prior to paying or authorizing a payment to a foreign official, Company employees or agents should be sure that no part of such payment is to be made for any purpose other than that to be fully and accurately described in the Company’s books and records. No undisclosed or unrecorded accounts of the Company are to be established for any purpose. False or artificial entries are not to be made in the books and records of the Company for any reason.
3.	Due Diligence and Selection of Representatives and Business Partners
	In its foreign activities, the Company will compete for all business opportunities vigorously, fairly, ethically and legally and, when appropriate, will negotiate contracts in a fair and open manner, regardless of any pressure exerted by foreign officials. This characterization of fairness and professionalism must extend to the activities of the Company’s agents, consultants, representatives and business partners. Prior to entering into an agreement with any agent, consultant, joint venture partner or other representative, the Company should perform proper and thorough FCPA-related due diligence and obtain from the third party certain assurances of compliance.
4.	Penalties
	The FCPA imposes criminal liability on both individuals and corporations. For individuals who violate the anti-bribery provisions of the FCPA, criminal penalties include fines of up to $250,000 or twice the amount of the gross pecuniary gain resulting from the improper payment, imprisonment of up to five years, or both. The Company may not reimburse any fine imposed on an individual. Corporations may be fined up to $2,000,000, or, alternatively, twice their pecuniary gain, for criminal violations of the FCPA’s anti-bribery provisions. In addition to criminal penalties, a civil penalty of up to $10,000 may be imposed upon a company that violates the anti-bribery provisions, and against any officer, director, employee or agent of a company, or a stockholder acting on behalf of a company who violates the Act. The US Department of Justice and the US Securities and Exchange Commission may also obtain injunctions to prevent FCPA violations.
	Individuals who willfully violate the accounting provisions of the FCPA may be fined up to $1,000,000, imprisoned up to ten years, or both. A corporation may be fined up to $2,500,000. Alternatively, both individuals and corporations violating the Act’s accounting provisions may be subject to fines of up to twice the amount of any pecuniary gain or loss resulting from such violation.

In addition to civil and criminal penalties, a person or company found in violation of the FCPA may be precluded from doing business with the US government. Other penalties include denial of export licenses and debarment from programs under the Commodity Futures Trading Commission and the Overseas Private Investment Corporation.

Violating the FCPA will also result in discipline by the Company, up to and including termination of employment.

Responsibilities of Employees

Every Company employee, agent or representative whose duties are likely to lead to involvement in or exposure to any of the areas covered by the FCPA is expected to become familiar with and comply with this policy. Periodic certifications of compliance with the Company’s policy may be required, as well as participation in training sessions as instructed by management.

If you have questions or problems concerning this policy, foreign officials or payment practices you should contact the Company’s General Counsel.

Procedures

Purpose

The US Foreign Corrupt Practices Act of 1977, as amended (“FCPA” or the “Act”) prohibits the bribery of “foreign officials”, and also requires US companies to maintain internal accounting controls and to keep books and records that accurately reflect all transactions. The following procedures provide guidance for compliance with the FCPA.

Scope

Every Company employee, agent and business partner whose duties are likely to lead to exposure to international business activities is required to read and comply with both the Company’s FCPA policy and these implementing procedures.

Responsibilities

The Company’s Executive Vice President, Administration, General Counsel and Secretary (“General Counsel”) and Accounting Department are responsible for ensuring that no gifts, payments or offers of gifts, payments or anything of value are made or authorized to “foreign officials” without following the procedures set forth herein. The General Counsel is responsible for reviewing requests for authorization of facilitating payments and promotional/marketing payments and for approving such requests when such payment, gift or offer would not violate either the FCPA or the Company’s FCPA Policy. Together, the General Counsel and Accounting Department are responsible for alerting employees, agents, consultants and business partners about the Company’s FCPA policy and for maintaining proper FCPA compliance and oversight files.

Procedures

1. International Payment Practices

a.	Prohibition of Improper Payments to Foreign Officials
	Company employees and agents must not pay or give things of value to foreign officials, directly or indirectly:

• To prevent some governmental action, such as the imposition of a large tax or fine, or the cancellation of an existing government contract;

• To obtain a license or other authorization from a government where the issuance involves the foreign official’s or his government’s discretion;

• To obtain confidential information about business opportunities, bids or the activities or competitors;

• To obtain the right to open an office or secure a zoning ruling or to influence the award of a government contract;

• To influence the rate of taxes that would be levied on the Company’s business;

• To obtain relief from government controls;

• To resolve governmental disputes (ie, the resolution of tax deficiencies);

• To affect the nature of foreign regulations or the application of regulator provisions; or

• To secure any improper advantage.

b.	Procedures for Making Permissible Payments to Foreign Officials
	There are certain exceptions to the FCPA’s prohibition against making payments or giving things of value to foreign officials.

i)	Facilitating Payments
	Under very limited circumstances, the FCPA permits facilitating payments to foreign officials in order to expedite or secure the performance of routine governmental actions. Routine governmental actions are limited to those actions which are ordinarily and commonly performed by a foreign official.
	The Company’s policy is to allow facilitating payments only when the refusal to make such payments may severely and adversely affect the Company’s ability to do business in a foreign country. Before making or authorizing any such payment, the Company employee desiring to do so first must submit to the General Counsel a detailed, written request for authorization that sets forth:

• The amount of the payment (it should not exceed $500);

• To whom the payment is to be made, including title;

• The manner/means of payment;

• Whether or not the payment is recurring (and if so, how often); and

• The purpose of the payment (ie, to facilitate the installation of telephone service).

ii)	Promotional Expenses
	The FCPA permits certain payments or benefits to foreign officials if the payments or benefits are related to promotion or demonstration of

the Company’s products or services, or to the performance of a particular Company contract with a foreign government or state-owned company. Company employees may authorize the following types of promotional expenses (after written approval from the General Counsel is obtained):

• Gifts to and Entertainment of Foreign Officials – expenses must be directly related to the promotion, demonstration or explanation of the Company’s products or services; reasonable in light of customary gifts; legal under foreign country’s laws; and properly recorded in the Company’s books.

• Reimbursement of Travel Expenses of Foreign Officials – expenses may be paid, provided that procedures above for Gifts and Entertainment are followed and documentation is proper.

• Foreign Political Contributions – under no circumstances shall Company funds be used to make political contributions to political parties or candidates in foreign countries.

• Donations to Foreign Charities – donations are permitted, provided that before making a donation to a non-US charitable entity, a request for approval is sent to the General Counsel and a background check on charitable organization is performed by the General Counsel. Documentation that substantiates the Company’s donation should be forwarded to the General Counsel for retention.

c. Record-Keeping and Internal Accounting Controls Provisions

i)	Record-Keeping
	It is the Company’s policy to maintain accurate, reasonably detailed records which fairly reflect its transactions and disposition of assets, regardless of whether the transactions are domestic or international. Consistent with the requirements of the FCPA, the Company shall maintain a system of internal accounting controls sufficient to provide reasonable assurances that:

• Transactions are executed in accordance with management’s general or specific authorization;

• Transactions are recorded as necessary in conformity with generally accepted accounting principles (“GAAP”), or any other criteria applicable to such statements; and

• Proper safeguarding of the Company’s assets exists.

ii)	Internal Accounting Controls
	The Accounting Department shall maintain accounting procedures, financial reporting and controls for the Company. Monitoring and auditing systems must be in place to detect violations of Company policy and of applicable laws.

These requirements apply to the Company and all majority-owned affiliates, whether in the US or in foreign locations. The Company also should make a good-faith effort to ensure that affiliates in which the Company holds 50% or less of the voting shares comply with the FCPA record-keeping and internal accounting control provisions.

2. Procedures for the Hiring of Foreign Consultants, Agents or Other Representatives

The Company’s FCPA policy prohibits both employees and independent third parties acting on its behalf from offering anything of value to a foreign official. Conduct of third parties (“representatives”) can subject the Company to liability. In all relationships with representatives, the Company should:

• Thoroughly screen potential representatives prior to beginning a relationship or entering into an agreement;

• Establish clear lines of authority for screening, selecting and monitoring each representative;

• Obtain from each representative written assurances that he/she understands and will abide by the Company’s policies, practices and procedures;

• Monitor the representative’s activities, including periodic review/audit of their performance and payment practices;

• Investigate any signs of potentially troublesome activities or unethical behavior; and

• Maintain records of the Company’s compliance-related activities concerning each representative.

	All Company agreements for the hiring or renewal of foreign agents must be approved by the General Counsel. The Company shall periodically obtain an executed FCPA certification from each of its international representatives.
3.	Procedures for Entering Into International Joint Ventures, International Mergers and Acquisitions and Other International Equity Transactions

a.	Due Diligence
	The Company should perform an effective due diligence review prior to entering into any foreign joint venture, merger or other equity transaction. Due diligence procedures should include review of local law, interviews of joint venture partners (particularly if state-owned/controlled) and key officials of acquisition target, identification of the ultimate beneficial owner of the foreign acquiree (in case of acquisition), review of agreements with governmental bodies, agreements with agents or consultants.
b.	Contractual Provisions
	It is recommended that FCPA related contractual provisions be included in every international joint venture agreement to be entered into by the Company. Also, when the Company is acquiring a company with foreign operations or entering into an equity transaction with a foreign entity, warrants should be made stating there have been no FCPA violations.

	The General Counsel should review all agreements entered into by the Company to ensure compliance with the Company’s FCPA policy.
4.	FCPA Audit Procedures to Verify Compliance
	Regular audits should be performed of the Company’s records, books and accounts that are designed to prevent and detect violations of the FCPA and compliance with the Company’s policies, practices and procedures. The audits should focus on the following items:

• The Company’s strategy to ensure compliance with the FCPA;

• Communication with and education of all pertinent employees and third-party representatives;

• Establishment and implementation of monitoring mechanisms;

• Review of all international business agreements; and

• Due diligence procedures taken prior to entering into arrangements with third-parties with international locations.

ACKNOWLEDGMENT AND CERTIFICATION

FOR

ENDEAVOUR CODE OF BUSINESS CONDUCT

     I have received and read the Endeavour Code of Business Conduct (the “Code”). I understand the standards and policies contained in the Code.

     Since the beginning of the period of time that I have been a director, employee, contractor, or consultant of Endeavour, I have complied with the Code. I further agree to comply with the Code for as long as I am subject thereto.

     If I have any questions concerning the meaning or application of the Code or any Endeavour policies, I know I can contact my manager or the managers in the Finance or Legal departments.

     I understand that if I know of any events or transactions that violate the Code, my responsibility is to communicate the information promptly to my manager or the managers of the Finance or Legal departments.

     I understand that this acknowledgment and certification will be placed in my personnel file for permanent reference.

Name

Signature

Date

A Final Word...

Remember, each time you meet with a supplier, shareholder, business partner, or another employee, you convey the ethics, standards, and values of Endeavour. Your actions reflect on all of us.

EX-21.1

Exhibit 21.1

SUBSIDIARIES

Name:		Jurisdiction of Organization
1.	Endeavour Operating Corporation, formerly NSNV, Inc.	Delaware
2.	Endeavour Energy UK Limited	England and Wales
3.	Endeavour Energy Norge AS	Norway
4.	Endeavour Energy Netherlands B.V.	The Netherlands
5.	Endeavour International Holding B.V.	The Netherlands
6.	END Operating Management Company	Delaware
7.	END Management Company	Delaware
8.	Endeavour North Sea Limited	England and Wales
9.	Endeavour Energy Luxembourg S.a.r.l.	Luxembourg

F-

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors
Endeavour International Corporation:

We consent to the incorporation by reference in the registration statements on Forms S-3 (Nos. 333-118503, 333-124145, 133-130515, 333-132684, 333-139304) and Forms S-8 (Nos. 333-119577, 333-128692, 333-143794) of Endeavour International Corporation of our reports dated March 13, 2008, with respect to the consolidated balance sheets of Endeavour International Corporation and subsidiaries as of December 31, 2007 and 2006, and the related consolidated statements of operations, stockholders’ equity and comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2007, and the effectiveness of internal control over financial reporting as of December 31, 2007, which reports appear in the December 31, 2007 annual report on Form 10-K of Endeavour International Corporation.

Effective January 1, 2006, the Company changed its method of accounting for share-based payments. Also, effective January 1, 2007, the Company changed its accounting for uncertain tax positions.

/s/ KPMG LLP
 
Houston, Texas
March 14, 2008

EX-23.2

EXHIBIT 23.2

CONSENT OF INDEPENDENT PETROLEUM ENGINEERS AND GEOLOGISTS

We hereby consent to the inclusion in the Endeavour International Corporation Form 10-K for the year ended December 31, 2007, and the incorporation by reference in Registration Statement number No. 333-143794 of Endeavour International Corporation on Form S-8, Registration Statement number No. 333-119577 of Endeavour International Corporation on Form S-8, number 333-118503 of Endeavour International Corporation on Form S-3, Registration Statement number No. 333-128692 of Endeavour International Corporation on Form S-8, number 333-130515 of Endeavour International Corporation on Form S-3, number 333-132684 of Endeavour International Corporation on Form S-3, number 333-139304 of Endeavour International Corporation on Form S-3, and number 333-124145 of Endeavour International Corporation on Form S-3, as amended, of the reference to Netherland, Sewell & Associates, Inc.

NETHERLAND, SEWELL & ASSOCIATES, INC.
By:	/s/ Danny D. Simmons
	Danny D. Simmons
	Executive Vice President

Houston, Texas
March 14, 2008

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, William L. Transier, certify that:

1. I have reviewed this Annual Report on Form 10-K of Endeavour International Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 14, 2008

/s/William L. Transier William L. Transier,

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, J. Michael Kirksey, certify that:

1. I have reviewed this Annual Report on Form 10-K of Endeavour International Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 14, 2008

/s/J. Michael Kirksey

J. Michael Kirksey,

Chief Financial Officer

EX-31.3

Exhibit 31.3

CERTIFICATIONS

I, Robert L. Thompson, certify that:

1. I have reviewed this Annual Report on Form 10-K of Endeavour International Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 14, 2008

/s/Robert L. Thompson

Robert L. Thompson,

Chief Accounting Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

          In connection with the Annual Report of Endeavour International Corporation (the “Company”) on Form 10-K for the period ended December 31, 2007 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, I, William L. Transier, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

     1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

     2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/William L. Transier

William L. Transier

Chief Executive Officer

March 14, 2008

          A signed original of this written statement required by Section 906 has been provided to Endeavour International Corporation and will be retained by Endeavour International Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

          In connection with the Annual Report of Endeavour International Corporation (the “Company”) on Form 10-K for the period ended December 31, 2007 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, I, J. Michael Kirksey, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

     1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

     2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/J. Michael Kirksey

J. Michael Kirksey

Chief Financial Officer

March 14, 2008

          A signed original of this written statement required by Section 906 has been provided to Endeavour International Corporation and will be retained by Endeavour International Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.3

Exhibit 32.3

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

          In connection with the Annual Report of Endeavour International Corporation (the “Company”) on Form 10-K for the period ended December 31, 2007 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, I, Robert L. Thompson, Chief Accounting Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

     1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

     2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/Robert L. Thompson

Robert L. Thompson

Chief Accounting Officer

March 14, 2008

          A signed original of this written statement required by Section 906 has been provided to Endeavour International Corporation and will be retained by Endeavour International Corporation and furnished to the Securities and Exchange Commission or its staff upon request.