Encore Energy Partners LP announced second quarter 2008 production and provided an operations update.
The Partnership reported average daily production of 6,600 BOE per day for the second quarter of 2008 which equaled the high-end of the Partnership's previously released production guidance and represented an increase of 291 BOE/D over first quarter 2008 production. The average daily production volumes for the second quarter of 2008 are composed of 4,645 Bbls of oil per day and 11,729 Mcf of natural gas per day.
Jon S. Brumley, Chief Executive Officer of Encore Energy Partners GP LLC, said, "We are excited about our production exceeding guidance at a time of high commodity prices. Our switch to a variable distribution method was just in time to allow our unitholders to participate in the oil rally. This variable distribution policy makes ENP a 'best in class' total return investment for our partners. Our partnership is composed of a unique set of properties that allow the partnership to maintain production with only 10% of cash flow, return large distributions to the unitholders, and pay down debt, ensuring that the partnership gets healthier and healthier every quarter. You can't ask for a better quarter. We have more production, less debt, and will have returned a large distribution to our partners. Now that adds value."
Two new operated wells in Crockett County, Texas were turned over to production in the second quarter of 2008.
During the third quarter of 2008, the Partnership will be installing two nitrogen membrane units at the Elk Basin gas plant at a net cost to the Partnership of $0.7 million. Sulfur prices continued to strengthen in the second quarter of 2008 resulting in increased revenue in Elk Basin.
During the second quarter, the Partnership acquired an existing net profits interest in its Crockett County properties in exchange for 283,700 common units of ENP valued at $5.8 million, subject to customary closing adjustments. The deal closed on May 1, 2008.
At June 30, 2008, ENP's long-term debt was $151.0 million. All of which was outstanding borrowings under the Partnership's revolving credit facility. The amount outstanding on the revolving credit facility decreased $14.0 million during the second quarter of 2008 reflecting the strong operating results and commodity price environment experienced during the quarter.
Encore Energy Partners LP was formed by Encore Acquisition Company to acquire, exploit, and develop oil and natural gas properties and to acquire, own, and operate related assets. ENP's assets consist primarily of producing and non-producing oil and natural gas properties in the Big Horn Basin of Wyoming and Montana, the Williston Basin of North Dakota, and the Permian Basin of West Texas.
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