Encore Acquisition Company (EAC, Financial) filed Quarterly Report for the period ended 2009-03-31.
Encore is an organized rapidly growing independent energy companyengaged in the acquisition development and exploitation of North American oil and natural gas reserves. Its oil and natural gas reserves are concentrated in fields located in the Williston Basin of Montana and North Dakota the Permian Basin of Texas and New Mexico the Anadarko Basin of Oklahoma and the Powder River Basin of Montana. Encore Acquisition Company has a market cap of $1.78 billion; its shares were traded at around $34.41 with a P/E ratio of 9.1 and P/S ratio of 1.6. Encore Acquisition Company had an annual average earning growth of 21.3% over the past 5 years.
In December 2007, Encore Operating entered into a purchase and investment agreement with OLLC and ENP pursuant to which OLLC acquired certain oil and natural gas properties and related assets in the Permian Basin in West Texas and in the Williston Basin in North Dakota. The transaction closed in February 2008. The consideration for the acquisition consisted of approximately $125.3 million in cash, including post-closing adjustments, and 6,884,776 common units representing limited partner interests in ENP. In determining the total purchase price, the common units were valued at $125.0 million. However, no accounting value was ascribed to the common units as the cash consideration exceeded Encore Operatings historical carrying value of the properties. OLLC financed the cash portion of the purchase price through borrowings under the OLLC Credit Agreement. EAC used the proceeds from the sale to reduce outstanding borrowings under the EAC Credit Agreement.
During the three months ended March 31, 2009 and 2008, ENP paid distributions of approximately $16.8 million and $9.8 million, respectively, of which $10.7 million and $5.6 million, respectively, was paid to EAC and its subsidiaries and had no impact on EACs consolidated cash.
On April 27, 2009, ENP announced a cash distribution for the first quarter of 2009 to unitholders of record as of the close of business on May 11, 2009 at a rate of $0.50 per unit. Approximately $16.8 million is expected to be paid to unitholders on or about May 15, 2009.
On April 27, 2009, EAC issued $225 million of its 9.50% Senior Subordinated Notes due 2016 (the 9.5% Notes), at 92.228 percent of par value. EAC received net proceeds of approximately $202.7 million, after deducting the underwriters discounts and
commissions of $4.5 million and offering expenses of approximately $0.4 million, which were used to reduce outstanding borrowings under the EAC Credit Agreement. Interest on the 9.5% Notes is due semi-annually on May 1 and November 1, beginning November 1, 2009. The 9.5% Notes mature on May 1, 2016. The provisions of the EAC Credit Agreement require the borrowing base to be reduced by 33 1/3 percent of the principal amount of the 9.5% Notes. As a result, the borrowing base on the EAC Credit Agreement was reduced to $825 million in April 2009.
Read the The complete ReportEAC is in the portfolios of Ron Baron of Baron Funds, John Keeley of Keeley Fund Management.
Encore is an organized rapidly growing independent energy companyengaged in the acquisition development and exploitation of North American oil and natural gas reserves. Its oil and natural gas reserves are concentrated in fields located in the Williston Basin of Montana and North Dakota the Permian Basin of Texas and New Mexico the Anadarko Basin of Oklahoma and the Powder River Basin of Montana. Encore Acquisition Company has a market cap of $1.78 billion; its shares were traded at around $34.41 with a P/E ratio of 9.1 and P/S ratio of 1.6. Encore Acquisition Company had an annual average earning growth of 21.3% over the past 5 years.
Highlight of Business Operations:
Encore Operating initially received an administrative fee of $1.75 per BOE of ENPs production for such services. From April 1, 2008 to March 31, 2009, the administration fee was $1.88 per BOE of ENPs production. Encore Operating also charges ENP for reimbursement of actual third-party expenses incurred on ENPs behalf and has substantial discretion in determining which third-party expenses to incur on ENPs behalf. In addition, Encore Operating is entitled to retain any COPAS overhead charges associated with drilling and operating wells that would otherwise be paid by non-operating interest owners to the operator of a well.In December 2007, Encore Operating entered into a purchase and investment agreement with OLLC and ENP pursuant to which OLLC acquired certain oil and natural gas properties and related assets in the Permian Basin in West Texas and in the Williston Basin in North Dakota. The transaction closed in February 2008. The consideration for the acquisition consisted of approximately $125.3 million in cash, including post-closing adjustments, and 6,884,776 common units representing limited partner interests in ENP. In determining the total purchase price, the common units were valued at $125.0 million. However, no accounting value was ascribed to the common units as the cash consideration exceeded Encore Operatings historical carrying value of the properties. OLLC financed the cash portion of the purchase price through borrowings under the OLLC Credit Agreement. EAC used the proceeds from the sale to reduce outstanding borrowings under the EAC Credit Agreement.
During the three months ended March 31, 2009 and 2008, ENP paid distributions of approximately $16.8 million and $9.8 million, respectively, of which $10.7 million and $5.6 million, respectively, was paid to EAC and its subsidiaries and had no impact on EACs consolidated cash.
On April 27, 2009, ENP announced a cash distribution for the first quarter of 2009 to unitholders of record as of the close of business on May 11, 2009 at a rate of $0.50 per unit. Approximately $16.8 million is expected to be paid to unitholders on or about May 15, 2009.
On April 27, 2009, EAC issued $225 million of its 9.50% Senior Subordinated Notes due 2016 (the 9.5% Notes), at 92.228 percent of par value. EAC received net proceeds of approximately $202.7 million, after deducting the underwriters discounts and
commissions of $4.5 million and offering expenses of approximately $0.4 million, which were used to reduce outstanding borrowings under the EAC Credit Agreement. Interest on the 9.5% Notes is due semi-annually on May 1 and November 1, beginning November 1, 2009. The 9.5% Notes mature on May 1, 2016. The provisions of the EAC Credit Agreement require the borrowing base to be reduced by 33 1/3 percent of the principal amount of the 9.5% Notes. As a result, the borrowing base on the EAC Credit Agreement was reduced to $825 million in April 2009.
Read the The complete ReportEAC is in the portfolios of Ron Baron of Baron Funds, John Keeley of Keeley Fund Management.
