Fort Worth, TX-based Encore Acquisition Co. announced that it has agreed to purchase Cortez Oil & Gas Inc., a privately held, independent oil and gas company, for $123 million.

With the Cortez purchase, Encore will get oil and natural gas properties in the Cedar Creek Anticline of Montana, the Permian Basin of West Texas and Southeastern New Mexico and the Mid Continent area, which includes the Arkoma and Anadarko Basins of Oklahoma and the Barnett Shale near Fort Worth, TX.

“This acquisition is a perfect fit for Encore,” commented Jonny Brumley, president. “Cortez enhances each of Encore’s core areas. These are quality properties, and we have identified a large portfolio of projects that will enable Encore to increase production and reserves.”

From internal estimates, Encore believes that Cortez has total proved reserves of 15 million boe, of which 60% are proved developed producing. The properties have an additional 7.8 million boe of identified drilling and waterflood upside opportunities.

Total proved reserves are 55% natural gas and the ratio of total proved reserves to production is 14 years. The Cortez properties are 80% operated and currently produce approximately 8,400 Mcf/d of gas and 1,550 b/d of oil for a combined total of 2,950 boe/d. Cortez currently owns more than 25,000 net developed acres and over 48,000 net undeveloped acres, of which 21,000 are mineral fee.

While the Cedar Creek Anticline and Permian Basin properties are almost entirely oil producing, the Mid Continent properties are predominately natural gas and are approximately 47% proved developed producing. They include operated production in the Golden Trend area of the Anadarko Basin and the Spiro (Atoka) zone in the Arkoma Basin.

Encore said it has identified numerous recompletion and infill development drilling opportunities in the Mid Continent basins. The company reported that there are also over 2,000 non-operated and royalty interests, primarily in the Anadarko Basin. In the Barnett Shale, Encore will operate 100% of the leases in Denton and Tarrant Counties and plans to continue the ongoing horizontal development program established by Cortez. Proved reserves in the Mid Continent area are estimated to be 47 Bcfe and current production is approximately 6,700 Mcfe/d.

Formed in 1998, Encore is an independent energy company engaged in the acquisition, development and exploitation of North American oil and natural gas reserves. The company said it expects to close the transaction in the second quarter of 2004.

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