Encore Energy Partners (ENP) Agrees to Buy Properties from Encore Acquisition; Updates Q2 Outlook; to Sell 8.2M Common Units

June 29, 2009 7:40 AM EDT

Encore Energy Partners LP (NYSE: ENP) announced today that it has entered into an agreement with Encore Acquisition Company (NYSE: EAC) to acquire oil and natural gas producing properties in the Rockies and the Permian Basin for $190 million in cash, subject to customary purchase price adjustments. The acquisition will be effective as of April 1, 2009 and is expected to close in August 2009. The transaction is expected to be immediately accretive to ENP's 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 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 barrels of oil equivalent, 93 percent of which are proved developed producing and 84 percent 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 16.0 years. These properties will be 96 percent operated by the Partnership.

More from the release.

The Partnership completed the previously announced acquisitions of oil and natural gas producing properties in the Williston Basin in North Dakota and Montana from Encore Acquisition Company ("EAC") and the purchase of natural gas producing properties in the Vinegarone Field in Val Verde County, Texas from an independent energy company for a total combined purchase price of approximately $53.3 million in cash, subject to customary adjustments. The updated second quarter guidance includes the impact of these recently completed acquisitions.

Click here to see the production guidance.

The company also announced today that it plans to make a public offering of 8,200,000 common units pursuant to an effective shelf registration statement. Encore Energy Partners will grant the underwriters a 30-day option to purchase up to an additional 1,230,000 common units. The net proceeds from the offering are expected to be used to fund a portion of the purchase price of the previously announced acquisition of oil and natural gas producing properties in the Rockies and Permian Basin from Encore Acquisition Company.

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