Encore Acquisition Company Announces 20 percent Annual Production Growth, Full Year...

Encore Acquisition Company Announces 20 percent Annual Production Growth, Full Year and Fourth Quarter 2007 Results

FORT WORTH, Texas--(Business Wire)--
Encore Acquisition Company (NYSE: EAC) ("Encore" or the "Company")
today reported unaudited fourth quarter and full year 2007 results.

Highlights for the fourth quarter of 2007 include the following:

-- Production of 37,530 BOE/D exceeded the mid-point of
production guidance by over 1,000 net BOE/D;

-- Oil and natural gas revenues increased 94 percent over the
fourth quarter of 2006 to $225 million;

-- Completed three Bakken wells and expect to bring on four
additional wells in the first quarter of 2008. Currently hold
198,400 gross acres (134,000 net) in the Bakken;

-- West Texas joint development agreement grew to 10.7 net
MMcfe/D;

-- Production in Bell Creek exceeded expectations of 900 net
BOE/D by 58 net BOE/D and exiting 2007 at a rate of 1,150 net
BOE/D;

-- First Madison well is still producing approximately 350 BOE/D
gross (193 net) and three offsetting wells are planned;

-- Drilled three East Texas Travis Peak wells with an average 2.1
gross MMcf/D initial production rate; and

-- Recompleted a Sand Hills well in Crane County, Texas with an
initial production rate of over 300 BOE/D.

The following table highlights certain reported amounts for 2007
as compared to 2006 ($ in millions, except average price amounts).

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*T
Qtr Ended Year Ended
December 31, December 31,
--------------- ---------------
2007 2006 2007 2006
------- ------- ------- -------
Oil and natural gas revenues $224.9 $116.2 $712.9 $493.3
Average daily production volumes
(BOE/D) 37,530 30,704 37,094 30,807
Oil as percentage of total production
volumes 73% 65% 71% 65%
Average realized combined price
($/BOE) $65.12 $41.13 $52.66 $43.87
Oil and gas related costs incurred $112.5 $110.4 $403.6 $373.2
Unproved acreage costs incurred $11.7 $6.0 $52.3 $24.5
Adjusted EBITDAX $150.8 $73.0 $476.3 $334.0
Net income $19.4 $10.1 $17.2 $92.4
Net income excluding certain charges $37.9 $9.6 $78.4 $79.1
Weighted average diluted shares
outstanding 54.4 53.8 54.1 52.7
*T

Fourth Quarter 2007

Encore reported net income for the fourth quarter of 2007 of $19.4
million ($0.36 per diluted share) as compared to $10.1 million ($0.19
per diluted share) for the fourth quarter of 2006. Encore reported net
income excluding certain charges for the fourth quarter of 2007 of
$37.9 million ($0.70 per diluted share) as compared to net income
excluding certain charges of $9.6 million ($0.19 per diluted share)
for the fourth quarter of 2006. Net income excluding certain charges
for the fourth quarter of 2007 excludes hedging gains and losses not
related to the current period, a loss related to the divestiture of
certain Mid-Continent assets, and non-cash compensation expense
related to Encore Energy Partners LP ("ENP"). Net income excluding
certain charges for the fourth quarter of 2006 excludes hedging gains
and losses not related to the current period. Net income excluding
certain charges is reconciled to its most directly comparable GAAP
measure of net income in the attached financial schedules.

Adjusted earnings before interest, income taxes, depletion,
depreciation and amortization, non-cash equity-based compensation
expense, non-cash derivative fair value loss (gain), and exploration
expense ("Adjusted EBITDAX") increased 107 percent to $150.8 million
for the fourth quarter of 2007 as compared to $73.0 million for the
fourth quarter of 2006. Adjusted EBITDAX is reconciled to its most
directly comparable GAAP measures in the attached financial schedules.

Encore's oil and natural gas revenues increased 94% in the fourth
quarter of 2007 to $224.9 million from $116.2 million in the fourth
quarter of 2006 as the average NYMEX oil price rose 51 percent to
$90.92 per barrel ("Bbl") versus $60.21 per Bbl in the fourth quarter
of 2006. The Company's NYMEX oil differential widened to $13.06 per
Bbl in the fourth quarter of 2007 from $10.06 per Bbl in the fourth
quarter of 2006, an increase of 30 percent. The combined effect of
these two factors was a 55 percent increase in the Company's average
wellhead oil price, which represents the net price the Company
receives for its oil production, which rose to $77.86 per Bbl for the
fourth quarter of 2007 from $50.15 per Bbl in the fourth quarter of
2006.

Lease operations expenses were $38.2 million for the fourth
quarter of 2007 ($11.08 per BOE) versus $27.9 million for the fourth
quarter of 2006 ($9.86 per BOE). Lease operations expense per BOE of
$11.08 in the fourth quarter of 2007 was $0.67 per BOE lower than the
mid-point of the Company's guidance, which resulted as the Company's
fixed operating costs were spread over higher than expected production
volumes.

General and administrative ("G&A") expenses for the fourth quarter
of 2007 were $12.9 million ($3.74 per BOE) versus $5.0 million ($1.77
per BOE) in the fourth quarter of 2006. Higher G&A expenses resulted
from higher compensation in the fourth quarter of 2007 versus the
fourth quarter of 2006 as the Company grew and the demand for
qualified personnel increased across the industry due to historically
high commodity prices. Additionally, the Company incurred public
company expenses, related to ENP, not incurred in 2006, and expenses
related to the sale of properties to ENP, which closed on February 7,
2008.

Full Year 2007

Encore's oil and natural gas revenues grew to $712.9 million in
2007. This represents the highest annual revenue in the Company's
history and a 45 percent increase over the $493.3 million in oil and
natural gas revenues for 2006. The increased revenue was attributable
to higher production volumes and higher average realized prices in
2007 as compared to 2006. Average daily production volumes grew 20
percent in 2007 to 37,094 BOE/D from 30,807 BOE/D in 2006. Oil
production represented 71 percent of the Company's total sales volumes
in 2007 as compared to 65 percent in 2006. Net profits interests
reduced reported average daily production volumes by approximately
1,466 BOE/D in 2007 versus 1,278 BOE/D in 2006.

Encore's higher average realized prices were primarily the result
of an overall increase in the market price of crude oil and tightening
of the Company's differentials in 2007 as compared to 2006. The
average NYMEX oil price rose nine percent to $72.39 per Bbl in 2007
versus $66.22 in 2006. The Company's NYMEX oil differential tightened
to $8.89 per Bbl in 2007 from $11.80 per Bbl in 2006, a decrease of 25
percent. The combined effect of these two factors was a 17 percent
increase in the Company's average wellhead oil price, which represents
the net price the Company receives for its oil production, which rose
to $63.50 per Bbl for 2007 from $54.42 per Bbl in 2006. The tightening
of the NYMEX oil differential was most apparent in the Cedar Creek
Anticline, where the Company saw its average NYMEX oil wellhead
differential tighten to $9.67 per Bbl in 2007 from $14.70 per Bbl in
2006.

Jon S. Brumley, Encore's Chief Executive Officer and President,
stated, "2007 was a great year for Encore. We refocused on long-life
oil properties that increased our margins and capital efficiency while
at the same time exposing Encore to a significant resource play in the
Bakken. After making $810 million of primarily oil acquisitions in
early 2007, we delevered by selling high-cost deep gas properties in
Oklahoma and bringing to market a publicly sponsored oil and gas MLP.
All of these decisions were timely and panned out. Our West Texas JV
with ExxonMobil is getting bigger and less risky as we have moved
through 75 percent of the commitment phase, and we see better and
better results from bringing the wells on quicker and drilling bigger
and better wells. We are pleased with our waterflood and HPAI projects
that are reducing our overall production decline rate and throwing off
large amounts of cash flow. Encore is positioned for a great 2008 by
planning a low-risk development budget and by helping to ensure a high
level of revenue through 2009 by entering into swaps, collars and put
contracts. Our project inventory is strong, and our exposure to
resource plays is increasing, while we are shrinking our outstanding
share base through a stock repurchase program. We are ready for 2008
and well positioned for a long-term profitable production growth rate
through 2011."

Net income for 2007 was $17.2 million ($0.32 per diluted share) as
compared to $92.4 million ($1.75 per diluted share) for 2006. Net
income excluding certain charges for 2007 was $78.4 million ($1.46 per
diluted share) as compared to $79.1 million ($1.50 per diluted share)
for 2006. Net income excluding certain charges for 2007 excludes
hedging gains and losses not related to the current period, a loss
related to the divestiture of certain Mid-Continent assets, and
non-cash compensation expense related to ENP. Net income excluding
certain charges for 2006 excludes hedging gains and losses not related
to the current period. Net income excluding certain charges is
reconciled to its most directly comparable GAAP measure of net income
in the attached financial schedules.

Adjusted EBITDAX increased 43 percent to $476.3 million for 2007
as compared to $334.0 million for 2006. Adjusted EBITDAX is reconciled
to its most directly comparable GAAP measures in the attached
financial schedules.

Lease operations expenses were $143.4 million for 2007 ($10.59 per
BOE) versus $98.2 million for 2006 ($8.73 per BOE). The increase in
the per BOE rate resulted as higher commodity prices in 2007 drove up
prices for experienced workers. Additionally, properties acquired in
2007 have higher lease operations expense per BOE than the Company's
historical average and the Company's divested properties.

G&A expenses for 2007 included a charge of $6.8 million for
compensation expense related to ENP. Additionally, G&A expenses
include approximately $1.0 million in expenses related to the sale of
properties to ENP that closed on February 7, 2008.

Encore's effective tax rate for the quarter was 40 percent. This
is higher than the Company's historical effective tax rate due to the
non-deductibility for federal income tax purposes of compensation
expense related to ENP.

The Company made two large proved property acquisitions and
completed 228 gross wells (82.6 net) during 2007. The following table
summarizes costs incurred related to oil and natural gas properties
for the periods indicated:

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Year Ended December 31,
------------------------------------
2007 2006
----------------- -----------------
(in thousands)
Acquisitions:
Proved properties $785,761 $4,486
Unproved properties 52,306 24,462
Asset retirement obligations 10,478 785
----------------- -----------------
Total acquisitions 848,545 29,733
----------------- -----------------

Development:
Drilling and exploitation 270,016 253,484
Asset retirement obligations 145 147
----------------- -----------------
Total development 270,161 253,631
----------------- -----------------

Exploration:
Drilling and exploitation 95,221 92,839
Geological and seismic 1,456 1,720
Delay rentals 776 646
----------------- -----------------
Total exploration 97,453 95,205
----------------- -----------------

Total costs incurred $1,216,159 $378,569
================= =================
*T

Operations Update

Drilling continued on the Bakken horizontal play in North Dakota.
Encore completed three wells in the fourth quarter of 2007 at an
average cost of $3.9 million. These three wells had an average gross
production rate of 440 BOE/D per well for the first seven days and 250
BOE/D per well for the first thirty days. The Company expects to bring
on four additional wells in the first quarter of 2008. Due to the
success the Company has seen in the area, Encore has expanded its
acreage position and currently holds 198,400 gross acres (134,000 net)
in this area.

The Company's Bell Creek Field in southeast Montana exceeded
fourth quarter expectations of 900 net BOE/D by averaging 958 net
BOE/D and exiting 2007 at a rate of 1,150 net BOE/D from waterflood
reactivation and polymer injections. The Company has a 100 percent
working interest in the properties and plans to reactivate additional
sections of the field as well as continue additional polymer
injections during 2008.

The Company's first Madison well is still producing approximately
350 BOE/D gross (193 net) after initially producing at a rate of
approximately 700 BOE/D gross (385 net). The well has already paid out
and has produced approximately 100 MBOE gross (55 net) in the first
174 days of production. Based on the results, the Company has
contracted a second North Dakota rig to drill a series of three
additional wells in the same field. The first well in this program was
spud on February 10, 2008.

In West Texas, the joint development agreement with ExxonMobil
continues to show excellent results, achieving a peak rate of
approximately 10.7 net MMcfe/D in December 2007 versus 3.7 net MMcfe/D
in December 2006. Twelve wells were brought online in the fourth
quarter of 2007. In the Wilshire field, Encore completed the
commitment phase of the joint development agreement in mid-year 2007.
With the commitment phase behind the Company, Encore is able to drill
simpler, repeatable wells in the heart of the field. The time between
the spud to sales of wells has greatly improved in 2007. At the
beginning of the program, a well typically took 230 days from spud to
sales and at the end of 2007; the typical time was reduced to 85 days.
Encore ended 2007 having satisfied 75 percent of the commitment phase
of the joint development agreement. The Company has planned a five rig
drilling program in the related fields in 2008, and by mid-year plans
to have completed the commitment phase in all areas. As a result, all
wells drilled in the second half of 2008 should be lower risk,
repeatable, development wells and not the complicated, high-risk wells
drilled during the commitment phase in each respective field.

Additionally in West Texas, the Company recompleted a Sand Hills
well in Crane County with an initial production rate of over 300
BOE/D. Due to this successful effort, the Company has budgeted for and
plans to drill three additional offset wells in Crane County in 2008.

In East Texas, Encore completed another three successful Travis
Peak wells during the fourth quarter of 2007 with an average initial
production rate of 2.1 gross MMcfe/D per well. The Company has a rig
drilling in East Texas to follow up on the success of these wells.

Liquidity Update

At December 31, 2007, the Company's long-term debt, net of
discount, was $1.1 billion, including $150 million of 6.25% senior
subordinated notes due April 15, 2014, $300 million of 6.0% senior
subordinated notes due July 15, 2015, $150 million of 7.25% senior
subordinated notes due December 1, 2017, and $526 million of
outstanding borrowings under the Company's revolving credit
facilities.

On December 31, 2007, Encore owned 14.5 million units of ENP,
including 0.5 million general partner units, and will receive
approximately $5.6 million on February 14, 2008 as a result of ENP's
declared cash distribution on those shares. Additionally, on February
7, 2008 as part of the consideration for the sale of properties to
ENP, Encore received an additional 6.9 million common units of ENP.

Stock Repurchase

From December 31, 2007 through February 13, 2008, Encore
repurchased approximately 781,000 shares of its outstanding common
stock for approximately $25.0 million, including brokerage
commissions, or an average price of $32.01 per share.

First Quarter 2008 Outlook

The Company expects the following in the first quarter of 2008:

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Average daily wellhead production volumes 39,000 to 39,800 BOE/D
Average daily net profits production
volumes 1,800 to 2,000 BOE/D
Average daily reported production volumes 37,000 to 38,000 BOE/D
Oil and natural gas related capital $93 to $98 million
Lease operations expense $11.50 to $12.00 per BOE
General and administrative expenses $2.50 to $2.65 per BOE
Depletion, depreciation, and amortization $14.50 to $15.00 per BOE
Production, ad valorem, and severance
taxes 9.7% of wellhead revenues
Oil differential (% of NYMEX) 14% of NYMEX oil price
10% of NYMEX natural gas
Natural gas differential (% of NYMEX) price
Income tax expense 38% effective rate
Income tax expense deferred 46% deferred
*T

The sale of $250.4 million of properties to ENP closed on February
7, 2008. As a result of this transaction the Company expects to have a
taxable gain of approximately $64.3 million and a related current tax
payable of $11.5 million in the first quarter of 2008.

Conference Call Details

Title: Encore Acquisition Company and Encore Energy Partners LP
Conference Call

Date and Time: Friday, February 15, 2008 at 12:00 p.m. Central
Time

Webcast: Listen to the live broadcast via www.encoreacq.com

Telephone: Dial 877-356-9552 ten minutes prior to the scheduled
time and request the conference call by supplying the title specified
above or ID 33226345.

A replay of the conference call will be archived and available via
Encore's website at the above web address or by dialing 800-642-1687
and entering conference ID 33226345. The replay will be available
through February 29, 2008. International callers can dial 706-679-0419
for the live broadcast or 706-645-9291 for the replay.

About the Company

Encore Acquisition Company is engaged in the acquisition and
development of oil and natural gas reserves from onshore fields in the
United States. Since 1998, Encore has acquired producing properties
with proven reserves and leasehold acreage and grown the production
and proven reserves by drilling, exploring, reengineering or expanding
existing waterflood projects, and applying tertiary recovery
techniques.

Cautionary Statement

This press release includes forward-looking statements, which give
Encore's current expectations or forecasts of future events based on
currently available information. Forward-looking statements in this
press release relate to, among other things, the benefits of
acquisitions and joint venture arrangements, drilling plans, expected
net profits interests, the likelihood of acquisitions and
dispositions, inventory growth, expected production volumes and
decline rates, expected revenues, expected expenses, expected taxes
(including the amount of any gain or deferral), expected capital
expenditures (including, without limitation, as to amount and
property), expected differentials, growth rates, future purchases
under the stock repurchase program, and any other statements that are
not historical facts. The assumptions of management and the future
performance of Encore are subject to a wide range of business risks
and uncertainties and there is no assurance that these statements and
projections will be met. Factors that could affect Encore's business
include, but are not limited to: the risks associated with drilling of
oil and natural gas wells; Encore's ability to find, acquire, market,
develop, and produce new properties; the risk of drilling dry holes;
oil and natural gas price volatility; derivative transactions
(including the costs associated therewith); uncertainties in the
estimation of proved, probable and potential reserves and in the
projection of future rates of production and reserve growth;
inaccuracies in Encore's assumptions regarding items of income and
expense and the level of capital expenditures; uncertainties in the
timing of exploitation expenditures; operating hazards attendant to
the oil and natural gas business; risks related to Encore's
high-pressure air program; drilling and completion losses that are
generally not recoverable from third parties or insurance; potential
mechanical failure or underperformance of significant wells; climatic
conditions; availability and cost of material and equipment; the risks
associated with operating in a limited number of geographic areas;
actions or inactions of third-party operators of Encore's properties;
Encore's ability to find and retain skilled personnel; diversion of
management's attention from existing operations while pursuing
acquisitions or joint ventures; availability of capital; the strength
and financial resources of Encore's competitors; regulatory
developments; environmental risks; uncertainties in the capital
markets; uncertainties with respect to asset sales; general economic
and business conditions; industry trends; and other factors detailed
in Encore's most recent Form 10-K and other filings with the
Securities and Exchange Commission. If one or more of these risks or
uncertainties materialize (or the consequences of such a development
changes), or should underlying assumptions prove incorrect, actual
outcomes may vary materially from those forecasted or expected. Encore
undertakes no obligation to publicly update or revise any
forward-looking statements.

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Encore Acquisition Company
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)

Three Months Ended Year Ended
December 31, December 31,
------------------ ---------------------
2007 2006 2007 2006
--------- -------- ----------- ---------
(unaudited) (unaudited)
Revenues:
Oil $185,303 $78,908 $562,817 $346,974
Natural gas 39,559 37,275 150,107 146,325
Marketing 14,882 41,527 42,021 147,563
--------- -------- ----------- ---------
Total revenues 239,744 157,710 754,945 640,862
--------- -------- ----------- ---------
Expenses:
Production:
Lease operations 38,240 27,862 143,426 98,194
Production, ad valorem,
and severance taxes 22,835 11,398 74,585 49,780
Depletion, depreciation, and
amortization 47,608 30,984 183,980 113,463
Exploration 3,870 12,172 27,726 30,519
General and administrative 12,908 4,995 39,124 23,194
Marketing 12,942 42,910 40,549 148,571
Derivative fair value loss
(gain) 44,317 (4,125) 112,483 (24,388)
Loss on divestiture of oil
and natural gas properties 1,904 - 7,361 -
Provision for doubtful
accounts 1,810 1,970 5,816 1,970
Other operating 5,501 4,480 9,705 8,053
--------- -------- ----------- ---------
Total operating expenses 191,935 132,646 644,755 449,356
--------- -------- ----------- ---------
Operating income 47,809 25,064 110,190 191,506
--------- -------- ----------- ---------
Other income (expense):
Interest (20,664) (11,365) (88,704) (45,131)
Other 778 417 2,667 1,429
--------- -------- ----------- ---------
Total other income (expense) (19,886) (10,948) (86,037) (43,702)
--------- -------- ----------- ---------
Income before income taxes 27,923 14,116 24,153 147,804
Income tax provision (12,986) (4,024) (14,476) (55,406)
Minority interest in loss of
consolidated partnership 4,490 - 7,478 -
--------- -------- ----------- ---------
Net income $19,427 $10,092 $17,155 $92,398
========= ======== =========== =========

Net income per common share:
Basic $0.36 $0.19 $0.32 $1.78
Diluted $0.36 $0.19 $0.32 $1.75

Weighted average common
shares outstanding:
Basic 53,261 53,004 53,170 51,865
Diluted 54,392 53,806 54,144 52,736
*T

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Encore Acquisition Company
Condensed Statements of Operations
(in thousands)
(unaudited)

Three Months Ended Year Ended
December 31, 2007 December 31, 2007
---------------------- ----------------------
EAC w/o ENP ENP EAC w/o ENP ENP
---------------------- ----------------------
Revenues:
Oil $165,046 $20,257 $503,981 $58,836
Natural gas 36,110 3,449 137,838 12,269
Marketing 13,286 1,596 33,439 8,582
------------ --------- ------------ ---------
Total revenues 214,442 25,302 675,258 79,687
------------ --------- ------------ ---------
Expenses:
Production:
Lease operations 33,663 4,577 129,506 13,920
Production, ad
valorem, and
severance taxes 20,121 2,714 66,014 8,571
Depletion,
depreciation, and
amortization 40,380 7,228 157,982 25,998
Exploration 3,870 - 27,726 -
General and
administrative 9,869 3,039 28,417 10,707
Marketing 11,924 1,018 33,876 6,673
Derivative fair value
loss 27,502 16,815 86,182 26,301
Loss on divestiture of
oil and natural gas
properties 1,904 - 7,361 -
Provision for doubtful
accounts 1,810 - 5,816 -
Other operating 5,273 228 8,943 762
------------ --------- ------------ ---------
Total operating expenses 156,316 35,619 551,823 92,932
------------ --------- ------------ ---------
Operating income (loss) $58,126 $(10,317) $123,435 $(13,245)
============ ========= ============ =========
*T

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Encore Acquisition Company
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

Year Ended
December 31,
-------------------
2007 2006
--------- ---------
Net income $17,155 $92,398
Adjustments to reconcile net income to net cash
provided by operating activities:
Non-cash and other items 384,871 198,637
Changes in operating assets and liabilities (82,319) 6,298
--------- ---------
Net cash provided by operating activities 319,707 297,333
--------- ---------

--------- ---------
Net cash used in investing activities (929,556) (397,430)
--------- ---------

Financing activities:
Net proceeds from (payments on) long-term debt 444,831 (12,000)
Net proceeds from issuance of equity securities 193,461 127,101
Other (27,502) (15,895)
--------- ---------
Net cash provided by financing activities 610,790 99,206
--------- ---------

Increase (decrease) in cash and cash equivalents 941 (891)
Cash and cash equivalents, beginning of period 763 1,654
--------- ---------
Cash and cash equivalents, end of period $1,704 $763
========= =========
*T

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Encore Acquisition Company
Condensed Consolidated Balance Sheets
(in thousands)

December 31, December 31,
2007 2006
------------ ------------
(unaudited)
Total assets $2,784,561 $2,006,900
============ ============
Liabilities (excluding long-term debt) $593,636 $528,339
Long-term debt 1,120,236 661,696
Minority interest in consolidated
partnership 200,160 -
Stockholders' equity 870,529 816,865
------------ ------------
Total liabilities and stockholders' equity $2,784,561 $2,006,900
============ ============

Working capital(a) $(16,220) $(40,745)

--------------------------------------------
(a) Working capital is defined as current assets minus current
liabilities.
*T

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*T
Encore Acquisition Company
Selected Operating Results
(unaudited)

Three Months Ended Year Ended
December 31, December 31,
------------------- -------------------
2007 2006 2007 2006
----------- ------- ----------- -------
Production volumes:
Oil (MBbls) 2,519 1,841 9,545 7,335
Natural gas (MMcf) 5,604 5,901 23,963 23,456
Combined (MBOE) 3,453 2,825 13,539 11,244

Daily production:
Oil (Bbls/D) 27,379 20,014 26,152 20,096
Natural gas (Mcf/D) 60,910 64,140 65,651 64,262
Combined (BOE/D) 37,530 30,704 37,094 30,807

Average realized prices:
Oil (per Bbl) $73.57 $42.85 $58.96 $47.30
Natural gas (per Mcf) 7.06 6.32 6.26 6.24
Combined (per BOE) 65.12 41.13 52.66 43.87

Average costs per BOE:
Lease operations expense $11.08 $9.86 $10.59 $8.73
Production, ad valorem, and
severance taxes 6.61 4.03 5.51 4.43
Depletion, depreciation, and
amortization 13.79 10.97 13.59 10.09
Exploration 1.12 4.31 2.05 2.71
General and administrative 3.74 1.77 2.89 2.06
Derivative fair value loss
(gain) 12.83 (1.46) 8.31 (2.17)
Provision for doubtful
accounts 0.52 0.70 0.43 0.18
Other operating 1.59 1.58 0.72 0.71
Marketing loss (gain) (0.56) 0.49 (0.11) 0.09

Three Months Ended Year Ended
December 31, 2007 December 31, 2007
------------------- -------------------
EAC w/o ENP ENP EAC w/o ENP ENP
------------------- -------------------
Production volumes:
Oil (MBbls) 2,211 308 8,492 1,053
Natural gas (MMcf) 5,125 479 22,094 1,869
Combined (MBOE) 3,065 388 12,174 1,365

Daily production:
Oil (Bbls/D) 24,026 3,353 23,266 3,440
Natural gas (Mcf/D) 55,699 5,211 60,532 5,272
Combined (BOE/D) 33,308 4,222 33,354 4,318

Average realized prices:
Oil (per Bbl) $74.64 $65.66 $59.35 $55.85
Natural gas (per Mcf) 7.05 7.19 6.24 6.56
Combined (per BOE) 65.63 61.04 52.72 52.09

Average costs per BOE:
Lease operations expense $10.98 $11.79 $10.64 $10.20
Production, ad valorem, and
severance taxes 6.57 6.99 5.42 6.28
Depletion, depreciation, and
amortization 13.18 18.61 12.98 19.05
Exploration 1.26 - 2.28 -
General and administrative 3.22 7.83 2.33 7.84
Derivative fair value loss 8.97 43.29 7.08 19.27
Provision for doubtful
accounts 0.59 - 0.48 -
Other operating 1.72 0.58 0.73 0.56
Marketing loss (gain) (0.44) (1.49) 0.04 (1.40)
*T

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Encore Acquisition Company
Derivative Summary as of February 13, 2008
(unaudited)

Oil Derivative Contracts(b)(c)
--------------------------------------

Average Average
Downside Downside Upside Upside
Price Volume Price Volume
(per Bbl) (Bbls) (per Bbl) (Bbls)
----------------- ------------------ ----------------- -------------

2008 - First Half
$- - $101.99 2,440
- - 96.65 2,000
83.77 19,880 - -
71.67 6,000 - -
61.32 9,500 - -
57.15 4,000 58.59 1,000

2008 - Second Half
$- - $101.99 2,440
92.48 3,500 94.00 5,500
83.92 16,380 89.42 1,500
71.67 6,000 - -
62.27 5,500 - -
56.67 3,000 - -

2009
90.46 2,000 91.77 2,440
81.69 16,380 89.22 3,000
75.00 2,250 - -
65.49 1,000 68.70 1,000

2010
- - 93.80 440
80.00 880 - -
75.00 2,000 - -
- - 77.23 1,000

2011
- - 95.41 1,440
80.00 1,880 - -
70.00 1,000 - -

Natural Gas Derivative Contracts(c)
--------------------------------------

Average Average
Downside Downside Upside Upside
Price Volume Price Volume
(per Mcf) (Mcf) (per Mcf) (Mcf)
----------------- ------------------ ----------------- -------------

2008
$- - $9.52 6,300
8.16 11,300 8.27 12,500
7.41 16,300 7.47 5,000
6.35 20,000 - -

2009
- - 9.83 3,800
8.20 3,800 - -
7.20 3,800 - -

2010
- - 9.58 3,800
8.20 3,800 - -
7.20 3,800 - -

(b) In addition to above contracts, Encore has sold put contracts for
3,000 Bbls/D at $50.00 in 2008 and 5,000 Bbls/D at $50.00 in 2009.

(c) Oil prices represent NYMEX WTI monthly average prices, while gas
prices represent various price points in 2008, and IF Houston Ship
Channel prices for 2009 and 2010. The differential between IF HSC
and NYMEX Henry Hub is approximately $0.20 per Mcf.
*T

-0-
*T
Encore Acquisition Company
Non-GAAP Financial Measures
(in thousands, except per share amounts)
(unaudited)

This press release includes a discussion of Adjusted EBITDAX, which is
a non-GAAP financial measure. The following table provides
reconciliations of Adjusted EBITDAX to net income and net cash
provided by operating activities, Encore's most directly comparable
financial performance and liquidity measures calculated and presented
in accordance with GAAP.

Three Months Ended Year Ended December
December 31, 31,
------------------ -------------------
2007 2006 2007 2006
--------- -------- --------- ---------
Net income $19,427 $10,092 $17,155 $92,398
Depletion, depreciation, and
amortization 47,608 30,984 183,980 113,463
Non-cash equity-based
compensation 3,207 2,183 15,997 8,980
Exploration 3,870 12,172 27,726 30,519
Interest expense and other 19,886 10,948 86,037 43,702
Income taxes 12,986 4,024 14,476 55,406
Non-cash derivative fair
value loss (gain) 43,802 2,579 130,910 (10,434)
--------- -------- --------- ---------
Adjusted EBITDAX 150,786 72,982 476,281 334,034
Change in operating assets
and liabilities (13,519) 4,092 (29,139) 12,651
Minority interest in loss of
consolidated partnership (4,490) - (7,478) -
Loss on divestiture of oil
and natural gas properties 1,904 - 7,361 -
Provision for doubtful
accounts 1,810 1,970 5,816 1,970
Other non-cash expenses 7,700 4,509 10,210 5,310
Interest expense and other (19,886) (10,948) (86,037) (43,702)
Current income taxes (1,772) 18 (1,888) (2,691)
Cash exploration expense (894) (1,824) (2,239) (2,391)
Purchased options (15,576) (7,848) (53,180) (7,848)
--------- -------- --------- ---------
Net cash provided by operating
activities $106,063 $62,951 $319,707 $297,333
========= ======== ========= =========

Adjusted EBITDAX is used as a supplemental financial measure by
Encore's management and by external users of Encore's financial
statements, such as investors, commercial banks, research analysts,
and others, to assess: (1) the financial performance of EAC's assets
without regard to financing methods, capital structure, or historical
cost basis, (2) the ability of Encore's assets to generate cash
sufficient to pay interest costs and support its indebtedness, (3)
Encore's operating performance and return on capital as compared to
those of other entities in our industry, without regard to financing
or capital structure, and (4) the viability of acquisitions and
capital expenditure projects and the overall rates of return on
alternative investment opportunities.

Adjusted EBITDAX should not be considered an alternative to net
income, operating income, net cash provided by operating activities,
or any other measure of financial performance presented in accordance
with GAAP. Encore's definition of Adjusted EBITDAX may not be
comparable to similarly titled measures of another entity because all
entities may not calculate Adjusted EBITDAX in the same manner.

This press release also includes a discussion of "net income excluding
certain charges," which is a non-GAAP financial measure. The
following table provides a reconciliation of net income excluding
certain charges to net income, Encore's most directly comparable
financial measure calculated and presented in accordance with GAAP.

Three Months Ended December 31,
--------------------------------------
2007 2006
------------------ -------------------
Per Per
Diluted Diluted
Total Share Total Share
--------- -------- --------- ---------
Net income $19,427 $0.36 $10,092 $0.19
Add: OCI amortization and
change in fair value in excess
of premiums 26,541 0.48 (790) (0.01)
Less: tax provision (benefit)
on non-cash derivative fair
value (9,892) (0.18) 294 0.01
Add: loss on divestiture of oil
and natural gas properties 1,904 0.04 - -
Less: tax benefit on
divestiture of oil and natural
gas properties (710) (0.01) - -
Add: non-cash unit-based
compensation related to ENP's
management incentive units 1,058 0.02 - -
Less: change in minority
interest related to ENP's
management incentive units (394) (0.01) - -
--------- -------- --------- ---------
Net income excluding certain
charges $37,934 $0.70 $9,596 $0.19
========= ======== ========= =========

Year Ended December 31,
--------------------------------------
2007 2006
------------------ -------------------
Per Per
Diluted Diluted
Total Share Total Share
--------- -------- --------- ---------
Net income $17,155 $0.32 $92,398 $1.75
Add: OCI amortization and
change in fair value in excess
of premiums 83,417 1.54 (21,248) (0.40)
Less: tax provision (benefit)
on non-cash derivative fair
value (31,090) (0.57) 7,906 0.15
Add: loss on divestiture of oil
and gas properties 7,361 0.14 - -
Less: tax benefit on
divestiture of oil and gas
properties (2,743) (0.05) - -
Add: non-cash unit-based
compensation related to ENP's
management incentive units 6,804 0.13 - -
Less: change in minority
interest related to ENP's
management incentive units (2,536) (0.05) - -
--------- -------- --------- ---------
Net income excluding certain
charges $78,368 $1.46 $79,056 $1.50
========= ======== ========= =========
*T

Encore Acquisition Company
Bob Reeves, Chief Financial Officer, 817-339-0918
rcreeves@encoreacq.com
or
Investor Relations:
Diane Weaver, 817-339-0803
dweaver@encoreacq.com

Copyright Business Wire 2008