UPDATE 2-Encore Acquisition to buy properties from EXCO
* Co says properties worth $375 mln
* Says to fund buy partly from sale of assets
* Says sale of assets to Encore Energy worth $190 mln * Encore Energy shares down 6 pct
* EXCO shares up 12 pct
(Adds further details, updates share movement)
June 29 (Reuters) - Onshore oilfield developer Encore Acquisition Co (EAC.N) said it would acquire oil and gas properties in the mid-continent and East Texas from EXCO Resources Inc (XCO.N) for $375 million in cash.
Separately, oil and gas company Encore Energy Partners LP (ENP.N) said it was buying properties in Rockies and Permian basin from Encore Acquisition for $190 million.
Encore Energy was formed by Encore Acquisition to acquire oil and gas properties.
Encore Acquisition said it would fund the acquisition partly from the sale to Encore Energy, and from borrowings under its credit facility.
Shares of Encore Energy were down 6.4 percent, while shares of EXCO were up 12 percent Monday morning on the New York Stock Exchange.
Encore Energy said its acquisition of properties in Rockies and the Permian, with estimated total proved reserves of about 12.4 million barrels of oil equivalent (boe), would be accretive to its distributable cash flow per unit.
Encore Energy said its annualized distribution rate will increase to $2.15 per unit from $2.05 per unit beginning from the third quarter.
The company also said it plans to make a public offering of 8.2 million common units, the net proceeds of which will be used to fund a portion of its acquisition.
"In connection with the acquisition... the Partnership has requested an increase in the borrowing base under its revolving credit facility of up to $375 million," Encore Energy said in a statement.
Encore Acquisition said its mid continent acquisition had proved developed reserves of about 12.8 boe, while the East Texas property included 495 gross wells with forecasted production of about 17.3 million cubic feet equivalent of natural gas per day.
"The proved developed properties will contribute approximately $40 million in cash flow to the company in 2009 and $65 million in cash flow in 2010, including hedges entered into in conjunction with the acquisition," Encore Acquisition said.
"We have elected to sell certain non-strategic assets, and this sale is a part of that effort. We have now reached agreement on nearly $450 million of such asset sales and will continue our efforts," EXCO Resources CEO Douglas Miller said in a statement.
EXCO Resources, which agreed to sell the properties to Encore Acquisition, had posted a wider first-quarter loss, hurt by a charge of $1.3 billion in ceiling test writedowns and income tax valuation.
PRODUCTION OUTLOOK RAISED
Encore Energy raised its second-quarter production and capital requirement outlook to include the effect of a recently completed acquisition of properties in North Dakota and Montana from Encore Acquisition and in Texas from an independent energy company.
The company forecast average daily production in the range of 6,800 to 7,000 boe per day, up from 6,000 to 6,600 boe per day.
It also raised oil and natural related capital for the quarter to $2.75 million to $3.25 million, up from $2 million to $3 million, while maintenance capital view for the year was raised to $8 million to $9.5 million from $7 million to $8.5 million.
Shares of Encore Acquisition were up 3 percent at $30.75, while those of Encore Energy were down 6 percent at $14.61 Monday morning on the New York Stock Exchange.
Shares of EXCO were up 12 percent at $11.48 Monday morning on the New York Stock Exchange, before paring gains to trade 9 percent up at $11.13.
For the alerts, please double click [ID:nWNAB2800] [ID:nWNAB2798] (Reporting by Arup Roychoudhury in Bangalore; Editing by Jarshad Kakkrakandy) (arup.roychoudhury@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: arup.roychoudhury.reuters.com@reuters.net))
