Encore Acquisition Company Announces Initial Results from its First Sanish Well Drilled in the North Dakota Bakken Resource Play

2008-07-24 14:20:02 -

- Encore Acquisition Company (NYSE:EAC) ("Encore" or the "Company") today reported initial results from its first well drilled in the Sanish Formation of the Bakken Shale Trend.

Encore recently finished drilling and completing its first well in the Sanish Formation of the Bakken Shale Trend, the Charlson 11-16H, in Williams County, North Dakota. The well was brought online on July 23 at an initial production rate of 1,106 BOE per day flowing up 7" casing. The Company has a 96 percent working interest in the well, which also contains very favorable pay in the Bakken Formation. The well is approximately four miles northwest of the best Sanish well drilled to date in North Dakota, the USA 2D-3-1H, which has produced over 560,000 BOE in 19 months.

Encore owns 10,400 net acres in the Charlson area and can drill or participate in an additional 28 wells on its current acreage position in this area of the Sanish. The Company is currently drilling a second Sanish well in the Charlson Field, which it plans to complete in the third quarter. Encore plans to drill a total of six wells in the Sanish in the Charlson Field in 2008. Additionally, two other Sanish wells will be drilled in the Charlson area offsetting the USA 2D-3-1H well. This area is prospective for both the Sanish and Bakken Formations, which could significantly add to the total recoverable reserves under the Company's leases.

Jon S. Brumley, Encore's Chief Executive Officer and President, stated, "We are very pleased with the initial results from our first well drilled in the Sanish Formation. The well came on strong with an IP of 1,106 BOE per day. We currently hold large acreage positions in several prolific areas of the Sanish. Based on the results of our first Sanish well and other wells that we have drilled in the Bakken Formation, this play is proving to be a significant source of incremental reserves and production for the Company and results continue to outpace our expectations."

As previously disclosed, Encore has recently expanded its acreage position in the Bakken and Sanish Shale Play to over 240,000 net acres. Encore plans to add a third rig to drill Bakken and Sanish wells in August 2008. Upon arrival of the additional rig, Encore plans to drill a Sanish well in its Cherry Creek Prospect, where the Company owns a significant lease position of approximately 70,000 net acres. Encore believes its Cherry Creek Prospect is in the Sanish fairway. The Company also plans to commence drilling in August in the Company's Almond Prospect, in Mountrail and Ward Counties, North Dakota, in which the Company currently holds an acreage position of approximately 53,000 net acres. The Almond Prospect is prospective for both the Sanish and Bakken Formations. The Company expects to drill and complete five-to-six Bakken and Sanish wells in the third quarter of 2008, as well as re-frac several current Bakken producers.

About the Company

On May 21, 2008, Encore announced that its Board of Directors authorized the Company's management team to explore a broad range of strategic alternatives to further enhance shareholder value, including, but not limited to, a sale or merger of the Company. Lehman Brothers Inc. has been engaged as the Company's financial advisor in this process.

There can be no assurance that the review of strategic alternatives will result in Encore changing its current business plan, pursuing a particular transaction, or completing any such transaction. Encore does not expect to update the market with any further information on the process unless and until its Board of Directors has approved a specific transaction or otherwise deems disclosure appropriate.

Encore Acquisition Company is engaged in the acquisition and development of oil and natural gas reserves from onshore fields in the United States. Since 1998, Encore has acquired producing properties with proven reserves and leasehold acreage and grown the production and proven reserves by drilling, exploring, reengineering or expanding existing waterflood projects, and applying tertiary recovery techniques.

Cautionary Statement

This press release includes forward-looking statements, which give Encore's current expectations or forecasts of future events based on currently available information. Forward-looking statements in this press release relate to, among other things, drilling and development plans, well completions, expected field activity levels, the availability of rigs and other oilfield equipment, inventory growth, expected production volumes, expected capital expenditures, and any other statements that are not historical facts. The assumptions of management and the future performance of Encore are subject to a wide range of business risks and uncertainties and there is no assurance that these statements and projections will be met. Factors that could affect Encore's business include, but are not limited to: the risks associated with drilling of oil and natural gas wells; Encore's ability to find, acquire, market, develop, and produce new properties; the risk of drilling dry holes; oil and natural gas price volatility; derivative transactions (including the costs associated therewith); uncertainties in the estimation of proved, probable, and potential reserves and in the projection of future rates of production and reserve growth; inaccuracies in Encore's assumptions regarding items of income and expense and the level of capital expenditures; uncertainties in the timing of exploitation expenditures; operating hazards attendant to the oil and natural gas business; risks related to Encore's high-pressure air injection program; drilling and completion losses that are generally not recoverable from third parties or insurance; potential mechanical failure or underperformance of significant wells; climatic conditions; availability and cost of material and equipment; the risks associated with operating in a limited number of geographic areas; actions or inactions of third-party operators of Encore's properties; Encore's ability to find and retain skilled personnel; diversion of management's attention from existing operations while pursuing acquisitions or joint ventures; availability of capital; the strength and financial resources of Encore's competitors; regulatory developments; environmental risks; uncertainties in the capital markets; uncertainties with respect to asset sales; general economic and business conditions; industry trends; and other factors detailed in Encore's most recent annual report on Form 10-K and other filings with the Securities and Exchange Commission. If one or more of these risks or uncertainties materialize (or the consequences of such a development changes), or should underlying assumptions prove incorrect, actual outcomes may vary materially from those forecasted or expected. Encore undertakes no obligation to publicly update or revise any forward-looking statements.

Encore Acquisition Company, Fort Worth
Bob Reeves, Chief Financial Officer, 817-339-0918
rcreeves@encoreacq.com
or
Investor Relations:
Diane Weaver, 817-339-0803
dweaver@encoreacq.com