Encore Acquisition Co., Fort Worth, Texas, (NYSE: EAC) plans to acquire oil and gas properties in the Williston Basin in Montana and North Dakota from Anadarko Petroleum Corp., The Woodlands, Texas, (NYSE: APC) for $410 million in cash.

Encore is also buying properties in the Big Horn Basin in Wyoming from Anadarko for $400 million in cash. And, the company plans to IPO a master limited partnership holding certain Wyoming properties to be acquired from Anadarko and from existing holdings. Net proceeds from the IPO will be used to pay debt.

Meanwhile, the company expects to sell some of its Barnett Shale, Anadarko Basin and Arkoma Basin properties. More information on this is expected at a later date.

The Williston Basin properties involve more than 50 fields and approximately 70,000 net acres in the Bakken play in Montana and North Dakota. Production is 5,000 net BOE per day. Total proved reserves are approximately 21 million BOE (90% oil, 81% proved developed producing). Anadarko operates approximately 93% of the properties; Encore will operate 85% after closing.

Pro forma, Encore's production in the Williston Basin will be 9,350 BOE per day with proved reserves of 41 million BOE (93% oil, 85% proved developed producing) and probable reserves of 11 million BOE.

Encore chief executive and president Jon S. Brumley says, "We are very excited to be entering the Bakken with a large acreage position in an active emerging play." The package includes 4 million BOE proved undeveloped and 9 million probable.

The Big Horn Basin, Wyoming, package involves assets primarily in Park County, and includes 614 wells in two fields on 17,550 net acres in the Elk Basin and Gooseberry area. The sale also includes the Elk Basin gas plant and Clear Fork Pipeline Co., a gathering system.

Net production is approximately 4,350 BOE per day (80% oil), with 350 BOE in gas liquids produced from the gas plant. Proved reserves are 20 million BOE (97% oil, 90% proved developed producing).

Brumley says, "The luxury of these properties is that production can be held flat with a relatively modest $7-million annual investment and the remaining $43 million is available to grow production or to reduce debt."

Anadarko chairman, president and CEO Jim Hackett says, "We have an extensive inventory of low-risk, repeatable projects, economies of scale and competitive advantages in the Greater Natural Buttes area in Utah, Powder River Basin in Wyoming and Wattenberg Field in Colorado. Our divestiture program will enable us to concentrate on these areas where we are confident we can deliver strong, predictable growth for years to come."

Encore will fund the acquisitions from cash on hand and credit facilities provided by Bank of America. Credit Suisse Securities (USA) LLC is financial advisor to Encore, Lehman Brothers is financial advisor to Anadarko and Tristone Capital marketed the assets.

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