Encore Acquisition planning to pay down $55 million of debt in 2009

By Jennifer Lanning Drey

Portland, Ore., Oct. 29 - Encore Acquisition Co. plans to repay $55 million of debt in 2009, Jon S. Brumley, the company's chief executive officer, said during its third-quarter earnings conference call held Wednesday.

Encore's 2009 budget also calls for 3% to 5% organic production growth, the repurchase of $40 million of its stock and increasing acreage in the Bakken area and Haynesville shale.

"It is exciting to have this high-quality budget and this low-risk of a budget during this time," Brumley said.

"All in all, 2009 will be a great year for Encore. We have plenty of projects. We'll improve the balance sheet and show good growth per share."

Encore had long-term debt of $1.2 billion at Sept. 30.

During the quarter, the company increased the amount outstanding under its revolving credit facility by $75.9 million, primarily as a result of exercising a preferential right for proved production and Haynesville acreage, tax payments and hedge premiums for 2009.

Encore had borrowing availability of $617.1 million under the facility at the end of the third quarter.

During the question-and-answer portion of the call, Brumley said the company still has a few A&D (acquisition and development) packages it is looking to sell but will probably wait until the financial markets improve.

If closed in 2009, Encore would be likely to use the proceeds for debt reduction, he said.

Encore reported third-quarter net income of $206.3 million, compared to net income of $12.0 million in the same period in 2007. Net income for the current period included a pre-tax net derivatives gain of $239.4 million, while net income in the prior-year period included a pre-tax net derivatives loss of $15.8 million.

The company said oil and natural gas revenues increased by 75% during the quarter, helped by the high commodity price environment.

Encore is a Fort Worth, Texas, developer of onshore North American oil and natural gas reserves.

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