Encore Acquisition Co. to acquire Cortez Oil & Gas Inc. for $123 million

By OGJ editors
HOUSTON, Mar. 3 -- Encore Acquisition Co., Fort Worth, plans to purchase private Cortez Oil & Gas Inc., Plano, Tex., for $123 million.

Cortez has 15 million boe of reserves by Encore estimates, 60% of which are proved developed producing. The properties are in the Cedar Creek anticline of Montana, the Permian Basin, and Arkoma, Anadarko, and Fort Worth basins. Closing is set for the second quarter of 2004. Almost all are complementary to existing Encore operations.

The properties have a further 7.8 million boe of identified drilling and waterflood upside opportunities, Encore said. Total proved reserves are 55% natural gas.
The properties are 80% operated and produce 8.4 MMcfd of gas and 1,550 b/d of oil. Cortez owns more than 25,000 net developed acres and more than 48,000 net undeveloped acres, of which 21,000 are mineral fee.

The Cedar Creek anticline properties are in the Glendive North, Glendive, and Gas City units in Dawson County, Mont. Encore has identified horizontal drilling and waterflood upside potential in Ordovician Red River zones.

The properties produce 900 boed from 4 million boe of proved reserves. They are also candidates for high pressure air injection, although Encore has not engineered the potential.

The Permian Basin properties produce 930 boed from 3.2 million boe of proved reserves and have infill, extension drilling, and waterflood potential.

The Midcontinent properties average 6,700 Mcfe from 47 bcfe of reserves and have numerous recompletion and infill drilling opportunities. Encore will operate 100% of the leases in Denton and Tarrant counties, Texas, and continue Cortez's horizontal development program in the Barnett shale.