Encore Acquisition

Capex

2009 CapEx

Encore Acquisition approved a capital budget for 2009 of $460 million related to its drilling and development program. Encore's strategy for 2009 is to continue to focus on allocation of capital to projects expected to achieve the most efficient production and reserve growth, expand the Company's acreage position in the highly successful Bakken/Sanish play, repurchase $40 million of common stock, and pay down debt, all well within internally generated cash flows. This budget allows the Company to have an organic growth rate of three to five percent for 2009.

The Company has executed a hedge plan that protects over 95 percent of its estimated oil production for 2009. The hedges include floors at $110.00 per barrel ("Bbl") for 11,630 barrels of oil per day ("BOPD"), swaps at $86.21 per Bbl for 6,000 BOPD, and floors at $80.00 per Bbl for 8,000 BOPD. The counterparties to these hedges are a diverse group comprising eleven institutions, all of which are rated A- or better by Standard & Poor's and/or Fitch, with the majority rated AA- or better.

While Encore expects to allocate capital to projects throughout its portfolio, the Company is focusing a substantial portion of the budget on three areas with the highest expected rate of return: the Bakken/Sanish, Haynesville/Cotton Valley/Travis Peak, and the West Texas joint venture with ExxonMobil.

The regional breakdown of the capital budget is expected to be as follows:
Bakken/Sanish: $ 164 million
Haynesville/Cotton Valley/Travis Peak: $ 88 million
West Texas JV: $ 82 million
Mid-Continent: $ 63 million
Other Rockies: $ 48 million
Other West Texas: $ 15 million

The $460 million of capital is expected to be invested in the following categories:
Drilling: $ 356 million
Improved Oil Recovery, Workovers: $ 50 million
Land, Seismic and Other: $ 54 million

Future Plans

Encore's strategy for 2009 is to continue to focus on allocation of capital to projects expected to achieve the most efficient production and reserve growth, expand the Company's acreage position in the highly successful Bakken/Sanish play, repurchase $40 million of common stock, and pay down debt, all well within internally generated cash flows. This budget allows the Company to have an organic growth rate of three to five percent for 2009.

The Company's 2009 budget is designed to continue to leverage Encore's expertise in improved oil recovery, horizontal drilling, and tight sands gas development. The activity in the Company's different plays is expected to be as follows:

• In the Bakken/Sanish, Encore expects to operate three rigs during 2009 and increase its acreage position in the Bakken to 325,000 net acres by the end of 2009.
• In the other areas of the Rockies, the Company will focus on improved oil recovery projects at the Cedar Creek Anticline, the Bell Creek field, the Big Horn Basin, and the Williston Basin.
• In the fields covered by the ExxonMobil West Texas joint venture, Encore expects to operate two to three rigs in 2009. One deep rig will be targeting the Devonian zone in the Pegasus and Wilshire fields. Another deep rig will be targeting the Montoya formation in the Delaware Basin. The Company plans to have rigs targeting the Wilshire Wolfberry and shallow gas in the Delaware Basin.
• In the Haynesville shale play, Encore will be operating one rig during most of 2009 as the Company begins developing its expanding acreage position.
• The Company will have several non-operated rigs targeting the Elm Grove field in North Louisiana in 2009.
• In the Mid-Continent, Encore expects to operate one rig most of 2009 in its Cleveland sand play in the Anadarko Basin of Oklahoma. In addition, the Company will participate in a high level of non-operated activity in the Cleveland play.

.

Production

Reserves

Total proved oil and natural gas reserves as of December 31, 2007 were 231 million barrels of oil equivalent ("MMBOE"), consisting of 189 million barrels ("MMBbls") of crude oil, condensate, and natural gas liquids and 256 billion cubic feet ("Bcf") of natural gas. During 2007, Encore acquired properties from Anadarko Petroleum Corporation located in the Williston Basin and in the Big Horn Basin and sold certain properties in the Anadarko and Arkoma Basins. Encore added 60 MMBOE of proved reserves during 2007 (before netting out 2007 production and asset sales) replacing over 443 percent of its 2007 production at an estimated all-in replacement cost of $20.27 per BOE based on unaudited development and exploration costs of $368 million and unaudited acquisition costs of $848 million. Encore produced 13.5 MMBOE during 2007 averaging 37,530 barrels of oil equivalent per day ("BOEPD") during the fourth quarter of 2007. Of the 443 percent of 2007 production replaced, approximately 318 percent was related to acquisitions and 125 percent to internal organic growth. Net of divested reserves, the Company replaced over 298 percent of its 2007 production.

At December 31, 2007, oil reserves accounted for 82 percent of total proved reserves, and 68 percent of total proved reserves are developed. Based on production for 2007, Encore's ratio of reserves to production is approximately 17.1 years for total proved reserves and 11.6 years for proved developed reserves.

Summary of Changes in Proved Reserves (MBOE)

Reserves at December 31, 2006: 204,561
Purchases of minerals-in-place: 43,146
Extensions and discoveries, net of revisions: 16,879
Sales of minerals-in-place: (19,719)
Production: (13,539)

Reserves at December 31, 2007: 231,328

Estimated proved oil and natural gas reserves increased by 5% to 205 million barrels of oil equivalent (BOE) as of December 31, 2006. Oil reserves accounted for 75% of total proved reserves, and 65% of total proved reserves are developed. Market prices used in the year-end reserve estimate were $61.06 per barrel for oil and $5.48 per Mcf for natural gas. Based on fourth quarter 2006 production of 30,704 BOE per day, Encore's ratio of reserves to production is approximately 18 years for total proved reserves and 12 years for proved developed reserves.

During 2006, Encore replaced 179% of the 11.2 million BOE it produced. Based on total expected capital expenditures for 2006 of approximately $379 million, these reserve volumes imply an all-in finding and development cost for the year, including acquisitions, of approximately $18.85 per BOE.

Who's Who

Offices