Endeavour reported an operational update for the third quarter of 2011.

Business Highlights: •North Sea:

◦Drilling at Bacchus is progressing on the three production wells ◦Awarded a rig contract for the Greater Rochelle project and expect to commence drilling in the spring of 2012 ◦Appraisal drilling at Tudor Rose is scheduled to begin in November ◦Production interruptions at the Bittern field during August and September resulted in fewer oil liftings; full production at the field recommenced in October •U.S. Onshore: ◦Six new Haynesville wells brought on production during the third quarter ◦U.S. production exited the quarter at approximately 17.5 million cubic feet of gas per day (MMCF/D) ◦Four vertical test wells have been drilled in Heath Shale oil play; core and log analyses are ongoing ◦Exploration activities in Alabama operations have been discontinued •Financial: ◦Completed the sale of $135 million of 5.5% convertible notes due 2016 ◦Incurred a one-time impairment of $29 million related to the U.S. full cost pool ◦Recorded a one-time charge of $26 million in deferred tax liability for the increase in the U.K. supplemental tax rate ◦Incurred an unrealized gain of $13 million relating to the revaluation of embedded derivatives.

"This was a challenging quarter for the industry, commodities and the capital markets. Likewise, Endeavour's results were negatively impacted by production interruptions and non-cash items related to the tax changes in the U.K. and the discontinuation of our activities in Alabama," said William L. Transier, chairman, chief executive officer and president. "We remain focused on turning on first production at our two key projects in the North Sea – Bacchus and Greater Rochelle. In the U.S., we are evaluating the results of four vertical pilot tests in the Heath shale oil play in Montana. Until production begins at Bacchus and we see better North American natural gas prices, the Company will conserve capital for the near-term projects yielding the highest rate of return."

Tags: Endeavour International Corporation