Encore buys 20 million barrels of oil reserves
By DAN PILLER
STAR-TELEGRAM STAFF WRITER
FORT WORTH - Encore Acquisition Co. of Fort Worth said Wednesday that it has bought about 20 million barrels of oil reserves in the Big Horn Basin of Wyoming for $400 million from Anadarko Petroleum of Houston.
Encore said the properties have an estimated life of about 14 years and will require about $17 million to develop from their current daily production of about 4,000 barrels of oil from 614 wells.
The deal is expected to close by the end of the first quarter and includes a gas-processing plant and an oil and natural gas pipeline gathering system.
Encore President Jon Brumley said the company believes that the properties will generate about $50 million in cash flow this year and next. "These properties can produce with a relatively modest $7 million annual investment, and the remaining $43 million is available to grow production or reduce debt," Brumley said.
Shares of Encore (ticker: EAC) closed at $23.42, up $1, in trading Wednesday on the New York Stock Exchange.
Encore, organized in 1998, is primarily an oil producer in older fields of North Dakota and West Texas
The sale by Anadarko is part of that company's strategy announced late last year to divest several major properties in Texas, Louisiana, Wyoming and the Gulf of Mexico to raise up to $9 billion to reduce debt incurred in its $22.5 billion purchase last year of Kerr-McGee Corp. and Western Gas Resources.
Anadarko has sold its Canadian subsidiary for $4.24 billion and is looking for a buyer for its once-thriving Giddings Field in South-Central Texas, which was developed by Union Pacific Resources Group of Fort Worth.
Anadarko bought Union Pacific Resources in 2000 for $8.2 billion.