Encore Acquisition CompanyEAC

Morningstar Rating

Stock Research and Analysis

by Eric Chenoweth, CFA

Encore Acquisition purchases established oil and gas properties, sometimes applying specialized technology or increasing investment to boost production from the acquired reserves. As with larger peer XTO Energy XTO, this strategy has helped Encore boost Read more

Bulls Say

Encore's portfolio includes positions in promising new producing regions including the Bakken oil play and the Haynesville Shale gas play.

Encore operates about 79% of its properties, giving it greater control over the timing and cost of development.

Encore's shareholders are getting a premium offer from Denbury compared with the stand-alone fair value estimate for the firm.

Encore successfully launched its tax-advantaged master limited partnership, Encore Energy Partners LP. ENP should help increase Encore's competitiveness in the market for oil and gas property acquisitions. Read more

Bears Say

Encore's asset base is less diversified than those of many of its peers. Most of the firm's producing assets are concentrated in oil plays in Rocky Mountain states.

A glut of crude oil in the Rocky Mountain states is likely to depress Encore's average selling prices there in 2009.

Costly exploratory failures, mechanical problems, and environmental disasters are constant concerns for exploration and production companies. Read more

Strategy

Encore adds to production and reserves primarily by acquiring oil and gas properties. Encore tries to maintain a disciplined acquisition program, acquiring properties at reasonable prices and hedging Read more

Management

Encore is led by a father-son team. Founder Jon Brumley recently turned over the CEO role to his son Jonny but remains chairman. Jonny Brumley joined the company in 2001 and became president in 2002. Before Encore, the senior Brumley did stints at Pioneer Read more

Profile

Founded in 1998, Fort Worth, Texas-based Encore Acquisition engages in the production of oil and natural gas. At the end of 2008, proven reserves were 185.7 million barrels Read more

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