Encore Acquisition Company reported that its total proved oil and natural gas reserves as of December 31, 2007 were 231 million barrels of oil equivalent, consisting of 189 million barrels of crude oil, condensate, and natural gas liquids and 256 billion cubic feet 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.
Based on the average NYMEX oil price of $90.92 per barrel for the fourth quarter of 2007, Encore's wellhead differential is approximately minus $13.06 per barrel for such quarter. Using an average NYMEX natural gas price of $6.97 per thousand cubic feet ("Mcf") for the fourth quarter, the Company's wellhead differential is approximately plus $0.55 per Mcf for such quarter. Operating expenses are in-line with previously disclosed estimates for the fourth quarter.
Encore's proved reserve estimates for 100 percent of its properties were prepared by independent petroleum engineers. Reserve replacement was calculated by dividing the sum of reserves extensions, discoveries, improved recovery, acquisitions, and revisions by production. Reserve replacement cost was calculated by dividing the sum of development, exploration and acquisition costs by the sum of reserve extensions, discoveries, improved recovery, acquisitions, and revisions. Consistent with industry practice, future capital costs to develop proved undeveloped reserves were not included in the calculation of costs incurred. The amounts provided in this press release are subject to change after review and audit of the financial statements.
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