The consideration for the acquisition will consist of $125 million in cash and approximately 6.88 million common units representing limited partner interests in Encore Energy Partners (ENP). In order to fund the cash portion of the purchase price, ENP will borrow under its existing $300 million revolving credit facility.
As a result of the transaction, Encore Acquisition Company (EAC) and its affiliates will own approximately 21.98 million of ENP’s outstanding units, or approximately 68%. The transaction will be immediately accretive to ENP’s 2008 distributable cash flow per unit.
Jon Brumley, CEO and president, said: We continue to analyze deals on the market, but this transaction is an example of our ability to grow ENP through the sale of properties from EAC to ENP. This transaction is positive for both companies. EAC is excited about increasing its equity position in ENP and at the same time delivering with the cash proceeds.
