ENDEAVOUR INTERNATIONAL CORP

On January 1, 2015, the Company adopted the Financial Accounting Standards Board’s  (“FASB”) updated guidance on reporting discontinued operations and disclosures of disposals of components of an entity.  The update amended the requirements for reporting discontinued operations, including the criteria for which discontinued operations are reported and additional disclosures about discontinued operations.  The guidance applies prospectively to new disposals and new classifications of disposal groups as held for sale after the effective date.    

The purchaser will be a newly formed entity (“Newco”) which will be owned by the holders of our First Priority Notes and the lenders under our Amended Term Loan Facility.    The purchase price for EIHBV and the Intercompany Note will be a credit bid of $1 and $1 in cash.  The Agent holds a perfected first priority lien on the Intercompany Note and 65% of the stock of EIHBV.  The closing of the APA is conditioned upon approval of the transactions by the Bankruptcy Court, the occurrence of the closing under the Settlement Agreement (defined below) and other customary conditions to closing.

Under the APA, 53% of the net cash proceeds from the sale of our oil and gas assets owned by EOC, which would otherwise be paid to holders of the First Priority Notes, will be used to fund

Our physical daily production was 12,636 boed and 11,169 boed for the six months ended June 30, 2015 and 2014, respectively.  Increases to physical production occurred primarily at Rochelle, which increased physical production by 2,487 boed from the six months ended June 30, 2015 to the six months ended June 30, 2014.  During the six months ended June 30, 2014, the E2 development well at Rochelle produced in March and both the E2 and W1 development wells produced in May and June.  During six months ended June 30, 2015, both development wells produced for approximately four and a half months, with six weeks of downtime due to existing compressor and mechanical issues at the Scott platform.  Offsetting this increase was a decrease at Bacchus, which experienced decreased physical production of 997 boed for the same period, which is reflective of the natural decline of the field and reduced production for approximately four weeks during the installation of gas lift facilities.

Net Loss, as Adjusted for the six months ended June 30, 2015 was $65.3 million compared to Net Loss, as Adjusted of $66.0 for the same period in 2014.  The decrease in Net Loss, as Adjusted, was primarily attributable to impairment of oil and gas properties of $133.0 million during the six months ended June 30, 2015 which did not occur during the six months ended June 30, 2014 offset by litigation settlement expense of $19.0 million during the six months ended June 30, 2014 which did not occur during the six months ended June 30, 2015an increase in net loss of $116.8 million during the six months ended June 30, 2015.

In the Piceance Basin Rim play in Northwest Colorado, Endeavour has leasehold of approximately 32,100 gross and 21,200 net acres as of June 30, 2015.  Endeavour is targeting liquids-rich Niobrara and Frontier objectives.  The Company has a federal unit and drilled an initial horizontal test in the Niobrara target zone during third quarter of 2014.  The Wiley 23-3-97 H1 horizontal well in Rio Blanco County (“Wiley well”) was spud in July 2014, reached total depth in August 2014 and was hydraulically fracture stimulated in October 2014.  In November to December 2014, a 23-day average flowback rate of 602 barrels of oil per day gross plus 1.3 to 1.8 mmcfd was achieved, with a peak daily oil rate of 805 barrels of oil per day gross.  In December 2014, we shut in the Wiley well to complete the production facilities and gas pipeline tie-in.  The facilities and pipeline tie-in were successfully completed in the first quarter of 2015.  Oil production resumed in late March 2015 and gas production began on April 1, 2015.