Fort Worth-based independent Encore Acquisition Co. said last Wednesday it will acquire $52.2 million of gas-rich North Louisiana acreage, which holds estimated proven reserves of 37 Bcfe — 14 Bcfe proved developed. The new properties, purchased from a group of private sellers, are non-operated and located in the Elm Grove Field in Bossier Parish.

Jon Brumley, CEO, said the purchase fits with the company’s high-pressure air opportunity, which is expected to show significant growth in 2006 or 2007. “We identified the North Louisiana Salt Basin as having the production profile that will fill in the gap prior to the anticipated high-pressure air uplift. We expect significant production growth from Elm Grove between now and December 2005.” The company expects to make the assets a core focus.

Encore’s internal reservoir engineers estimated the reserve status of the properties. The 20 Bcfe of probable volumes represent additional Hosston and Cotton Valley opportunities within the field. Production from these properties is 99% natural gas, and the reserve to production ratio is 14 years. Net production from these properties is approximately 7,000 Mcfe/d.

Non-operated working interests range from 2% to 38% across 1,800 (net) acres in 15 sections. According to Encore, the properties produce primarily from multiple tight sandstone reservoirs at depths ranging between 7,200 and 10,000 feet. Encore also is purchasing 1,500 (net) acres of rights that can allow for possible exploration of the Bossier and Smackover formations, which produce in the area.

Encore has identified more than 150 development and re-completion opportunities in the Hosston and Cotton Valley formations, and expects to exploit these opportunities during the remainder of this year and through 2005.

The acquisition is expected to be accretive to the company, and from June 1, 2003 through the end of 2003, revenues less production expenses are anticipated to be in excess of $10 million. Production expenses on a per Mcfe basis are expected to average $0.30 for lease operation expenses and $0.22 for production taxes. Encore has hedged 5,000 MMBtu/d at an average New York Mercantile Exchange equivalent of $5.06 for August 2003 through December 2005.

Encore anticipates closing the transaction, subject to due diligence and other customary closing conditions, this month, with the sale effective June 1, 2003, funding the transaction with bank financing under its existing credit line.

Before the Louisiana acquisition announced on Wednesday, the five-year-old independent’s oil and natural gas reserves were focused in the Williston Basin of Montana and North Dakota, the Permian Basin of Texas and New Mexico, the Anadarko Basin of Oklahoma, the Powder River Basin of Montana and the Paradox Basin of Utah.

Encore’s estimated proved reserves as of Dec. 31, 2002, were 111.7 million bbl and 99.8 Bcf, or 128.3 MMboe. The proved developed reserves were 107.6 MMboe, or 84% of total proved reserves. The Cedar Creek Anticline in the Williston Basin represented 75% of Encore’s total proved reserves at the end of last year.

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