Business Combinations

6 Months Ended

Jun. 30, 2013

Business Combinations [Abstract]

Business Combinations

Note 3 – Business Combinations

On December 23, 2011, we entered into a Sale and Purchase Agreement (the “Purchase Agreement”), through our wholly owned subsidiary Endeavour Energy UK Limited (“EEUK”), with ConocoPhillips (U.K.) Limited, ConocoPhillips Petroleum Limited and ConocoPhillips (U.K.) Lambda Limited, subsidiaries of ConocoPhillips (collectively, the “Sellers”), to acquire their interest in three producing U.K. oil fields in the Central North Sea.

On May 31, 2012, we closed the Alba field portion of the acquisition, which consisted of an additional 23.43% interest in the Alba field.  This increased our total working interest in the Alba field to 25.68%.  The Alba Acquisition was closed for aggregate cash consideration of approximately $229.6 million.

The acquisition of the additional interest in the Alba field was accounted for using the business combination method.  The following summarizes the allocation of the purchase price for the Alba field acquisition:

Purchase price	$	255,400
Purchase price adjustments for estimated after-tax cash flows from the acquired asset and
interest costs from economic date of January 1, 2011 to closing		(25,823)
Total purchase price	$	229,577
Allocation of purchase price:
Property and equipment	$	191,507
Goodwill		47,353
Current assets		24,632
Current liabilities		(12,815)
Deferred tax liability		(6,999)
Other long-term liabilities		(14,101)
Total purchase price	$	229,577

Goodwill was the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from assets acquired that could not be individually identified and separately recognized. 

The purchase price allocation is based on an assessment of the fair value of the assets acquired and liabilities assumed in the Alba field acquisition.  The assessments of the fair values of oil and gas properties acquired were based on projections of expected future net cash flows, discounted to present value. 

The following table sets forth unaudited pro forma condensed combined financial and operating data which are presented to give effect to the Alba acquisition as if it had occurred on January 1, 2012.  The information does not purport to be indicative of actual results, if any of these transactions had been in effect for the periods indicated, or future results.

		Pro Forma
		Three Months Ended		Six Months Ended
		June 30, 2012		June 30, 2012
Revenues	$	23,013	$	110,685
Net income (loss) to common shareholders	$	(25,186)	$	(50,642)
Net income (loss) per share - basic and diluted	$	(0.65)	$	(1.32)

Revenues and income from operations associated with the acquired interest in the Alba field for the three months ended June 30, 2013 were $94.9 million and $11.5 million, respectively.  Revenues and income from operations associated with the acquired interest in the Alba field for the six months ended June 30, 2013 were $116.2 million and $15 million, respectively.  Revenues and income from operations associated with the acquired interest in the Alba field for the period from May 31, 2012 through June 30, 2012 did not have a significant impact on our revenues and results of operations.

After substantial effort and extensions, we and the Sellers were unable to reach the agreement required to transfer the interests in the two remaining U.K. oil fields under the Purchase Agreement due to failure to agree on certain commercial terms related to the future timing and amount of collateral required to be posted for future decommissioning costs.

As a result of the parties being unable to reach agreement to enable the additional transfers to occur, the Purchase Agreement terminated in accordance with its terms on December 14, 2012.  As previously disclosed, we paid a $10 million deposit in connection with the acquisition of the interests in the two remaining fields, which ConocoPhillips retained.