2009-05-18-2009-05-18-2009-06-29

Acquired long-lived properties in Vinegarone Field in Permian Basin in Val Verde County, TX, gaining 2.4 MMBOE proved developed, 3 MMcfg/d.

The MLP Encore Energy Partners LP, Fort Worth, Texas, (NYSE: ENP) operated by Encore Acquisition Co., (NYSE: EAC) has acquired producing properties in the Vinegarone Field in the Permian Basin in Val Verde County, Texas, from an undisclosed seller for $28 million in cash. The Vinegarone properties include a 99% interest in shallow-declining mature assets that produce from the Strawn formation. The properties have estimated proved developed reserves of approximately 2.4 million barrels of oil equivalent (100% proved developed producing, 100% gas). Production is approximately 3 million cubic feet of gas, or 507 barrels of oil equivalent, per day. The reserves-to-production ratio is estimated to be 13 years with lifting costs of approximately $1.08 per barrel and a decline rate of less than 7%. Jon S. Brumley, chief executive and president of Encore Energy Partners GP LLC, says, "Due to the Vinegarone's less than 7% production decline, this asset is perfect for our MLP. It is an ideal bolt-on to our current Val Verde Basin assets, and its low lifting costs of only $0.18 per Mcf allow this property to generate a high margin." Brumley adds, "Having high-margin, long-life properties and a large parent makes us unique and has created a resilient MLP that is able to take advantage of this uncertain market. We are fortunate to have this relationship with EAC." The effective date is April 1. Simmons & Co. International and Griffis & Associates LLC are financial advisors to Encore Energy's conflicts committee, and Simmons delivered a fairness opinion. Barclays Capital is financial advisor and rendered a fairness opinion to Energy Acquisition's board. Encore Energy holds interests in the Big Horn Basin in Wyoming and Montana, the Williston Basin in North Dakota, the Permian Basin in West Texas, and the Arkoma Basin in Arkansas.