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Encore Acquisition has also agreed with Encore Energy Partners LP (ENP) to sell its oil and natural gas producing properties in the Rockies and the Permian Basin for $190 million in cash. This sale proceeds will help Encore Acquisition to finance the purchase of the Mid-Continent and East Texas assets. The company will also use borrowings under its revolving credit facility for the remaining amount.

Encore Energy Partners was formed by Encore Acquisition to acquire, exploit, and develop oil and natural gas properties and to acquire, own, and operate related assets.

The Mid-Continent properties are comprised of oil and natural gas assets primarily located in the Norge Marchand Unit in Grady County, Oklahoma. The Norge Marchand Unit is a waterflood that produces from the Marchand Sandstone and has estimated original oil in place of 200 million barrels. According to the company, the field is 100% operated and the company's internal engineers have forecasted production of 1,955 barrels of oil equivalent, or BOE, per day, from the field as of the anticipated closing date. The acquired properties also include assets in the Texas Panhandle, southwestern Kansas, and western Oklahoma.

Encore Acquisition said that the Mid-Continent package has estimated proved developed reserves of approximately 12.8 million BOE, 50% of which are oil and natural gas liquids and 100% of which are proved developed producing. The Norge Marchand reserves represent approximately 63% of the Mid-Continent package.

Further, the East Texas properties include long-life assets mainly in the Gladewater field. This field produces primarily from the Cotton Valley Sands. The East Texas properties include 495 gross wells with forecasted production of approximately 17.3 million cubic feet equivalent of natural gas per day. Gladewater's estimated proved developed reserves are approximately 10.3 million BOE, 95% of which are natural gas. All of the reserves are proved developed producing.

Encore Acquisition also said that its internal engineers have estimated that the proved developed properties will contribute approximately $40 million in cash flow to the company in 2009 and $65 million in cash flow in 2010, including hedges entered into in conjunction with the acquisition. In connection with the acquisition, Encore has entered into derivative contracts on over 90% of the acquisition's proved developed producing volumes for 2010 through 2012.

EXCO was advised by Scotia Waterous (USA) Inc. and Tristone Capital, LLC in the transactions.

Encore Energy today said in a separate announcement that the acquisition of oil and natural gas producing properties in the Rockies and the Permian Basin will be effective as of April 1, 2009 and is expected to close in August 2009. The acquired properties are comprised of shallow-declining mature assets located in the Big Horn Basin in Wyoming, the Permian Basin in West Texas and New Mexico, and the Williston Basin in Montana and North Dakota.

The properties have estimated total proved reserves of approximately 12.4 million BOE, 93% of which are proved developed producing and 84% of which are oil. The properties currently produce approximately 2,129 BOE per day, and such properties are estimated to have a total reserve-to-production ratio of approximately 16 years. These properties will be 96% operated by the Partnership.

Encore Energy expects that this transaction will be immediately accretive to its distributable cash flow per unit. Due to this accretion, the Partnership expects that its annualized distribution rate will increase from an estimated $2.05 per unit for the second quarter of 2009 to $2.15 per unit beginning with the distribution for the third quarter of 2009. The Partnership also expects to increase its 2009 annualized distribution rate to $2.15 per unit beginning with the third quarter of 2009. The acquisition is expected to be approximately 8% to 11% accretive to the distribution per unit at a 1.1 times coverage ratio for 2010.

In connection with the acquisition, the Partnership has entered into derivative contracts on over 90 percent of the acquisition's proved developed producing volumes for 2010 through 2012.

EAC is trading at $30.73, down $0.89, on a volume of 41,467 shares.

XCO rose $0.94 and is trading at $11.19, on a volume of 1.44 million shares.

ENP is trading at $14.68 on Monday, down $0.87, on a volume of 206,360 shares.

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