Moody's rates Encore notes B2

Moody's Investors Service said it assigned a B2 rating to Encore Acquisition's new $150 million of 10-year senior subordinated notes and confirmed its existing ratings and positive outlook.

Moody's confirmed Encore's $150 million of 8.375% senior subordinated notes due 2012 at B2, senior implied rating at Ba3 and senior unsecured issuer rating at Ba3.

Proceeds will fund the pending $123 million Cortez Oil & Gas acquisition, estimated by Encore to hold 15 million barrels of oil equivalent in proven reserves (60% proven developed), generate 2,950 barrels of oil equivalent of daily production, and need $32 million in capital for proven non-producing reserves.

Encore will pay $41,695 per unit of current daily production, $10.33/boe (fully-loaded) for proven reserves, add to core holdings (Cedar Creek Anticline, Permian Basin, and Mid-Continent), and add early stage exposure to the Barnett Shale in the Fort Worth Basin.

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