Item 8.01 Other Events.
Acquisitions from EXCO
On June 28, 2009, Encore Operating, L.P. ("Encore Operating"), a wholly owned
subsidiary of Encore Acquisition Company ("EAC"), entered into a purchase and
sale agreement with EXCO Resources, Inc. (together with its affiliate EXCO
Operating Company, LP, "EXCO"), which provides for the acquisition by Encore
Operating from EXCO of certain oil and natural gas producing properties in the
Mid-Continent for $210 million in cash, subject to customary purchase price
adjustments and closing conditions. The acquisition will be effective April 1,
2009 and is expected to close in August 2009.
Also on June 28, 2009, Encore Operating entered into a separate purchase and
sale agreement with EXCO, which provides for the acquisition by Encore Operating
of certain oil and natural gas producing properties in East Texas for
$165 million in cash, subject to customary purchase price adjustments and
closing conditions. The acquisition will be effective April 1, 2009 and is
expected to close in August 2009.
Sale to Encore Energy Partners Operating LLC ("OLLC")
Also on June 28, 2009, Encore Operating entered into a purchase and sale
agreement (the "Purchase and Sale Agreement") with Encore Energy Partners LP
("ENP") and OLLC, a wholly owned subsidiary of ENP, which provides for the
acquisition by OLLC from Encore Operating of certain oil and natural gas
producing properties in the Big Horn Basin in Wyoming, the Permian Basin in West
Texas and New Mexico, and the Williston Basin in Montana and North Dakota for
$190 million in cash, subject to customary purchase price adjustments. The
transaction is also conditioned on ENP obtaining satisfactory financing to
complete the purchase. The sale will be effective April 1, 2009 and is expected
to close in August 2009.
Each of the parties to the Purchase and Sale Agreement is a direct or
indirect subsidiary of EAC. As a result, certain officers of EAC serve as
officers and/or directors of more than one of such entities. EAC and its
affiliates, including Encore Operating, own 20,924,055 of ENP's outstanding
common units, or approximately 58 percent. EAC, through its indirect ownership
of ENP's general partner, also holds all 504,851 general partner units in ENP.
The acquisition of the Mid-Continent properties from EXCO and the sale of
properties to ENP are intended to qualify as a like-kind exchange under the
Internal Revenue Code, and as such, the gain on the sale of properties to ENP is
not expected to be taxable.
