Note 1 – General

Description of Business

Endeavour International Corporation is an independent oil and gas company engaged in the exploration, development, production and acquisition of energy reserves in the U.S. and the U.K. Endeavour was incorporated under the laws of the state of Nevada on January 13, 2000. As used in these Notes to Condensed 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. The accompanying financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10–K for the year ended December 31, 2012.

2013 Liquidity and Capital Resources

Because we are highly leveraged, required capital expenditures, debt service and other long-term obligations will continue to require a significant portion of our cash flow from operations and available cash on hand. The combination of these debt servicing requirements, capital expenditures and the delay in cash flow resulting from the mechanical issues at Rochelle may cause our cash needs to exceed the cash flow from our current operations.

During the remainder of 2013, our primary uses of financial resources are expected to be:

·	our capital expenditures, primarily related to our drilling activities at our Alba and Rochelle fields in the U.K.; and

·	interest payments on existing credit facilities and payments in support of our reimbursement agreements covering our abandonment obligations.

We believe we should be able to fund operations, including our capital expenditures and other expenditure requirements for the foreseeable future, based on our projections of funds generated from operations, cash available and existing sources of financing. Since year-end 2012, we have also completed several transactions to improve our liquidity and extended the maturities of some of our debt and other obligations. These financing activities were designed to provide us with sufficient liquidity to bring the Rochelle development on line and drill a third well at Bacchus. The third Bacchus field well began producing during the third quarter 2013, and first production was received from the Rochelle field early in the fourth quarter. These transactions include:

·	extending or replacing reimbursement agreements covering certain of our abandonment liabilities in the U.K. which would have matured in 2013;

·	entering into forward sale agreements;

·	entering into a monetary production payment; and

·	extending the maturity of the commitments under our revolving credit facility.

If we are unable to meet any short-term liquidity needs out of cash on hand, we would attempt to refinance debt, sell forward our production, sell assets, issue debt or equity or perform any other alternatives. No assurance can be given however that we could successfully consummate any of these alternatives.