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                                                                    Exhibit 10.3

                                FACILITY GUARANTY


         THIS FACILITY GUARANTY (this "GUARANTY") is dated as of the ____ day of
__________, ____, by [Subsidiary of Borrower, a ____________] ("GUARANTOR"), in
favor of FLEET NATIONAL BANK, ___________________, ________________, and each of
the other financial institutions listed on Schedule 1 to the Credit Agreement
(as hereinafter defined) as Banks, and each of their successors and assigns as
permitted pursuant to the Credit Agreement (Fleet National Bank acting as a Bank
but not as Administrative Agent, Wachovia Bank, N.A. acting as a Bank but not as
Syndication Agent, Fortis Capital Corp. acting as a Bank but not as
Documentation Agent, each of the other Banks listed on Schedule 1 of the Credit
Agreement, and each of their successors and assigns are collectively referred to
herein as "NOTEHOLDERS").

                                  WITNESSETH:

         WHEREAS, Encore Acquisition Company, a Delaware corporation
("BORROWER"), [Guarantor] [Encore Operating, L.P., a Texas limited partnership,
as a Subsidiary Guarantor], Noteholders, Fleet National Bank, as Administrative
Agent ("ADMINISTRATIVE AGENT"), Wachovia Bank, N.A., as Syndication Agent, and
Fortis Capital Corp., as Documentation Agent are parties to that certain Credit
Agreement (as from time to time amended, the "CREDIT AGREEMENT") dated as of
June 25, 2002, pursuant to which Noteholders have made a revolving credit loan
to Borrower and agreed to issue and participate in letters of credit issued on
behalf of Borrower (unless otherwise defined herein, all terms used herein with
their initial letter capitalized shall have the meaning given such terms in the
Credit Agreement); and

         WHEREAS, Noteholders have required, as a condition to the extension
and/or the continued extension of credit under the Credit Agreement, that
Guarantor execute and deliver this Guaranty; and

         WHEREAS, Guarantor has determined that valuable benefits will be
derived by it as a result of the Credit Agreement and the extension of credit
made (and/or to be made) by Noteholders thereunder; and

         WHEREAS, Guarantor has further determined that the benefits accruing to
it from the Credit Agreement exceed Guarantor's anticipated liability under this
Guaranty.

         NOW, THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged and confessed, Guarantor hereby covenants and
agrees as follows:

         1. Guarantor hereby absolutely and unconditionally guarantees the
prompt, complete and full payment when due, no matter how such shall become due,
of the Obligations, and further guarantees that Borrower will properly and
timely perform the Obligations. Notwithstanding any contrary provision in this
Guaranty, however, Guarantor's maximum liability under this Guaranty is limited,
to the extent, if any, required so that its liability is not subject to
avoidance under applicable Debtor Relief Laws (as such term is defined in
Paragraph 8 hereof).

         2. If Guarantor is or becomes liable for any indebtedness owing by
Borrower to any Noteholder by endorsement or otherwise than under this Guaranty,
such liability shall not be in any manner impaired or affected hereby, and the
rights of Noteholders hereunder shall be

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cumulative of any and all other rights that Noteholders may ever have against
Guarantor. The exercise by any Noteholder of any right or remedy hereunder or
under any other instrument, at law or in equity, shall not preclude the
concurrent or subsequent exercise of any other right or remedy.

         3. In the event of default by Borrower in payment of the Obligations,
or any part thereof, when such Obligations become due, either by their terms or
as the result of the exercise of any power to accelerate, Guarantor shall, on
demand, and without further notice of dishonor and without any notice having
been given to Guarantor previous to such demand of the acceptance by Noteholders
of this Guaranty, and without any notice having been given to such Guarantor
previous to such demand of the creating or incurring of such Obligations, pay
the amount due thereon to Noteholders at Administrative Agent's office as set
forth in the Credit Agreement, and it shall not be necessary for any Noteholder,
in order to enforce such payment by Guarantor, first, to institute suit or
exhaust its remedies against Borrower or others liable on such Obligations, to
have Borrower joined with Guarantor in any suit brought under this Guaranty or
to enforce their rights against any security which shall ever have been given to
secure such indebtedness; provided, however, that in the event any Noteholder
elects to enforce and/or exercise any remedies they may possess with respect to
any security for the Obligations prior to demanding payment from Guarantor,
Guarantor shall nevertheless be obligated hereunder for any and all sums still
owing to Noteholders on the Obligations and not repaid or recovered incident to
the exercise of such remedies.

         4. Notice to Guarantor of the acceptance of this Guaranty and of the
making, renewing or assignment of the Obligations and each item thereof, are
hereby expressly waived by Guarantor.

         5. Each payment on the Obligations shall be deemed to have been made by
Borrower unless express written notice is given to Noteholders at the time of
such payment that such payment is made by Guarantor as specified in such notice.

         6. If all or any part of the Obligations at any time are secured,
Guarantor agrees that Administrative Agent and/or Noteholders may at any time
and from time to time, at their discretion and with or without valuable
consideration, allow substitution or withdrawal of collateral or other security
and release collateral or other security or compromise or settle any amount due
or owing under the Credit Agreement or amend or modify in whole or in part the
Credit Agreement or any Loan Paper executed in connection with same without
impairing or diminishing the obligations of Guarantor hereunder. Guarantor
further agrees that if Borrower executes in favor of any Noteholder any
collateral agreement, mortgage or other security instrument, the exercise by any
Noteholder of any right or remedy thereby conferred on such Noteholder shall be
wholly discretionary with such Noteholder, and that the exercise or failure to
exercise any such right or remedy shall in no way impair or diminish the
obligation of Guarantor hereunder. Guarantor further agrees that Noteholders and
Administrative Agent shall not be liable for their failure to use diligence in
the collection of the Obligations or in preserving the liability of any Person
liable for the Obligations, and Guarantor hereby waives presentment for payment,
notice of nonpayment, protest and notice thereof (including, notice of
acceleration), and diligence in bringing suits against any Person liable on the
Obligations, or any part thereof.

         7. Guarantor agrees that Noteholders, in their discretion, may (i)
bring suit against all guarantors (including, without limitation, Guarantor
hereunder) of the Obligations jointly and

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severally or against any one or more of them, (ii) compound or settle with any
one or more of such guarantors for such consideration as Noteholders may deem
proper, and (iii) release one or more of such guarantors from liability
hereunder, and that no such action shall impair the rights of Noteholders to
collect the Obligations (or the unpaid balance thereof) from other such
guarantors of the Obligations, or any of them, not so sued, settled with or
released. Guarantor agrees, however, that nothing contained in this paragraph,
and no action by Noteholders permitted under this paragraph, shall in any way
affect or impair the rights or obligations of such guarantors among themselves.

         8. Guarantor represents and warrants to each Noteholder that (i)
Guarantor is a corporation, limited liability company or partnership duly
organized and validly existing under the laws of the jurisdiction of its
incorporation or formation; and (ii) Guarantor possesses all requisite authority
and power to authorize, execute, deliver and comply with the terms of this
Guaranty; this Guaranty has been duly authorized and approved by all necessary
action on the part of Guarantor and constitutes a valid and binding obligation
of Guarantor enforceable in accordance with its terms, except as the enforcement
thereof may be limited by applicable Debtor Relief Laws; and no approval or
consent of any court or governmental entity is required for the authorization,
execution, delivery or compliance with this Guaranty which has not been obtained
(and copies thereof delivered to Noteholders). As used in this Guaranty, the
term "DEBTOR RELIEF LAWS" means the Bankruptcy Code of the United States of
America and all other applicable liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, receivership, insolvency, reorganization, suspension
of payments or similar debtor relief Laws from time to time in effect affecting
the rights of creditors generally.

         9. Guarantor covenants and agrees that until the Obligations are paid
and performed in full, except as otherwise provided in the Credit Agreement or
unless Noteholders give their prior written consent to any deviation therefrom,
it will (i) at all times maintain its existence and authority to transact
business in any State or jurisdiction where Guarantor has assets and operations,
(ii) promptly deliver to Noteholders and to Administrative Agent such
information respecting its business affairs, assets and liabilities as
Noteholders may reasonably request, and (iii) duly and punctually observe and
perform all covenants applicable to Guarantor under the Credit Agreement and the
other Loan Papers. The failure of Guarantor to comply with the terms of this
paragraph shall be an Event of Default under the Credit Agreement.

         10. This Guaranty is for the benefit of Noteholders, their successors
and assigns, and in the event of an assignment by Noteholders (or their
successors or assigns) of the Obligations, or any part thereof, the rights and
benefits hereunder, to the extent applicable to the Obligations so assigned, may
be transferred with such Obligations. This Guaranty is binding upon Guarantor
and its successors and assigns.

         11. No modification, consent, amendment or waiver of any provision of
this Guaranty, nor consent to any departure by Guarantor therefrom, shall be
effective unless the same shall be in writing and signed by each Noteholder, and
then shall be effective only in the specific instance and for the purpose for
which given. No notice to or demand on Guarantor in any case shall, of itself,
entitle Guarantor to any other or further notice or demand in similar or other
circumstances. No delay or omission by Noteholders in exercising any power or
right hereunder shall impair any such right or power or be construed as a waiver
thereof or any acquiescence therein, nor shall any single or partial exercise of
any such power preclude other or further exercise thereof, or the exercise of
any other right or power hereunder. All rights and


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remedies of Noteholders hereunder are cumulative of each other and of every
other right or remedy which Noteholders may otherwise have at law or in equity
or under any other contract or document, and the exercise of one or more rights
or remedies shall not prejudice or impair the concurrent or subsequent exercise
of other rights or remedies.

         12. No provision herein or in any promissory note, instrument or any
other Loan Paper executed by Borrower or Guarantor evidencing the Obligations
shall require the payment or permit the collection of interest in excess of the
Maximum Lawful Rate. If any excess of interest in such respect is provided for
herein or in any such promissory note, instrument, or any other Loan Paper, the
provisions of this paragraph shall govern, and neither Borrower nor Guarantor
shall be obligated to pay the amount of such interest to the extent that it is
in excess of the amount permitted by law. The intention of the parties being to
conform strictly to any applicable federal or state usury Laws now in force, all
promissory notes, instruments and other Loan Papers executed by Borrower or
Guarantor evidencing the Obligations shall be held subject to reduction to the
amount allowed under said usury Laws as now or hereafter construed by the courts
having jurisdiction.

         13. If Guarantor should breach or fail to perform any provision of this
Guaranty, Guarantor agrees to pay Noteholders all costs and expenses (including
court costs and reasonable attorneys fees) incurred by Noteholders in the
enforcement hereof.

         14. (a) The liability of Guarantor under this Guaranty shall in no
manner be impaired, affected or released by the insolvency, bankruptcy, making
of an assignment for the benefit of creditors, arrangement, compensation,
composition or readjustment of Borrower, or any proceedings affecting the
status, existence or assets of Borrower or other similar proceedings instituted
by or against Borrower and affecting the assets of Borrower.

             (b) Guarantor acknowledges and agrees that any interest on any
portion of the Obligations which accrues after the commencement of any
proceeding referred to in clause (a) above (or, if interest on any portion of
the Obligations ceases to accrue by operation of law by reason of the
commencement of said proceeding, such interest as would have accrued on such
portion of the Obligations if said proceedings had not been commenced) shall be
included in the Obligations because it is the intention of Guarantor,
Administrative Agent and Noteholders that the Obligations which are guaranteed
by Guarantor pursuant to this Guaranty should be determined without regard to
any rule of law or order which may relieve Borrower of any portion of such
Obligations. Guarantor will permit any trustee in bankruptcy, receiver, debtor
in possession, assignee for the benefit of creditors or similar Person to pay
Noteholders or Administrative Agent, or allow the claim of Noteholders or
Administrative Agent in respect of, any such interest accruing after the date on
which such proceeding is commenced.

             (c) In the event that all or any portion of the Obligations are
paid by Borrower, the obligations of Guarantor hereunder shall continue and
remain in full force and effect or be reinstated, as the case may be, in the
event that all or any part of such payment(s) are rescinded or recovered
directly or indirectly from Administrative Agent or any Noteholder as a
preference, fraudulent transfer or otherwise, and any such payments which are so
rescinded or recovered shall constitute Obligations for all purposes under this
Guaranty.

         15. Guarantor understands and agrees that any amounts of Guarantor
on account with any Noteholder may be offset to satisfy the obligations of
Guarantor hereunder.

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         16. Guarantor hereby subordinates and makes inferior any and all
indebtedness now or at any time hereafter owed by Borrower to Guarantor to the
Obligations evidenced by the Credit Agreement and agrees after the occurrence of
a Default or Event of Default under the Credit Agreement, not to permit Borrower
to repay, or to accept payment from Borrower of, such indebtedness or any part
thereof without the prior written consent of Noteholders.

         17. During the period that Noteholders have any commitment to lend or
participate in Letter of Credit Exposure under the Loan Papers, or any amount
payable under any Note remains unpaid or any Letter of Credit remains
outstanding, and throughout any additional preferential period subsequent
thereto, Guarantor hereby waives any and all rights of subrogation to which
Guarantor may otherwise be entitled against Borrower, or any other guarantor of
the Obligations, as a result of any payment made by Guarantor pursuant to this
Guaranty.

         18. As of the date hereof, the fair saleable value of the property of
Guarantor is greater than the total amount of liabilities (including contingent
and unliquidated liabilities) of Guarantor, and Guarantor is able to pay all of
its liabilities as such liabilities mature and Guarantor does not have
unreasonably small capital within the meaning of Section 548, Title 11, United
States Code, as amended. In computing the amount of contingent or liquidated
liabilities, such liabilities have been computed at the amount which, in light
of all the facts and circumstances existing as of the date hereof, represents
the amount that can reasonably be expected to become an actual or matured
liability.

         19. If any provision of this Guaranty is held to be illegal, invalid,
or unenforceable, such provision shall be fully severable; this Guaranty shall
be construed and enforced as if such illegal, invalid, or unenforceable
provision had never comprised a part hereof; and the remaining provisions hereof
shall remain in full force and effect and shall not be affected by the illegal,
invalid, or unenforceable provision or by its severance herefrom. Furthermore,
in lieu of such illegal, invalid, or unenforceable provision there shall be
added automatically as a part of this Guaranty a provision as similar in terms
to such illegal, invalid, or unenforceable provision as may be possible and be
legal, valid and enforceable.

         20. (a) Except to the extent required for the exercise of the remedies
provided in the other security instruments, Guarantor hereby irrevocably submits
to the nonexclusive jurisdiction of any Texas state or federal court over any
action or proceeding arising out of or relating to this Guaranty or any other
Loan Paper, and Guarantor hereby irrevocably agrees that all claims in respect
of such action or proceeding may be heard and determined in such Texas state or
federal court. Guarantor hereby irrevocably waives, to the fullest extent
permitted by Law, any objection which it may now or hereafter have to the laying
of venue of any Litigation (as hereinafter defined) arising out of or in
connection with this Guaranty or any of the Loan Papers brought in any Texas or
New York state or federal court. Guarantor hereby irrevocably waives any claim
that any Litigation brought in any such court has been brought in an
inconvenient forum. Guarantor hereby irrevocably consents to the service of
process out of any of the aforementioned courts in any such Litigation by the
mailing of copies thereof by certified mail, return receipt requested, postage
prepaid, to Guarantor's office at ____________________. Guarantor irrevocably
agrees that any legal proceeding against Noteholders shall be brought in the
district courts of New York County, New York, or in the United States District
Court for the Southern District of New York. Nothing herein shall affect the
right of any Noteholder to commence legal proceedings or otherwise proceed
against Guarantor in any jurisdiction or to serve process in any manner
permitted by applicable Law. As used herein, the term "LITIGATION"


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means any proceeding, claim, lawsuit or investigation (i) conducted or
threatened by or before any court or governmental department, commission, board,
bureau, agency or instrumentality of the United States or of any state,
commonwealth, nation, territory, possession, county, parish, or municipality,
whether now or hereafter constituted or existing, or (ii) pending before any
public or private arbitration board or panel.

                  (b) Nothing in this Paragraph 20 shall affect any right of any
Noteholder to serve legal process in any other manner permitted by Law or affect
the right of any Noteholder to bring any action or proceeding against Guarantor
in the courts of any other jurisdictions.

                   (c) To the extent that Guarantor has or hereafter may acquire
any immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property,
Guarantor hereby irrevocably waives such immunity in respect of its obligations
under this Guaranty and the other Loan Papers.

         21. THIS GUARANTY AND THE OTHER LOAN PAPERS COLLECTIVELY REPRESENT THE
FINAL AGREEMENT BY AND AMONG NOTEHOLDERS, ADMINISTRATIVE AGENT, SYNDICATION
AGENT, DOCUMENTATION AGENT, AND GUARANTOR AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF
NOTEHOLDERS, ADMINISTRATIVE AGENT, SYNDICATION AGENT, DOCUMENTATION AGENT, AND
GUARANTOR. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG NOTEHOLDERS,
ADMINISTRATIVE AGENT, SYNDICATION AGENT, DOCUMENTATION AGENT, AND GUARANTOR.

         22. GUARANTOR, FOR ITSELF, ITS SUCCESSORS AND ASSIGNS, HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ITS RIGHT TO A JURY
TRIAL, IN ANY LITIGATION ARISING OUT OF OR IN CONNECTION WITH THIS GUARANTY OR
ANY OF THE OTHER LOAN PAPERS.

         23. THIS GUARANTY AND THE OTHER LOAN PAPERS SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS.

         EXECUTED and effective as of the date first above written.

                                  GUARANTOR:

                                  [ENCORE OPERATING, L.P.]

                                  [SUBSIDIARY OF BORROWER]


                                  By:
                                     ------------------------------------------
                                  Name:
                                       ----------------------------------------
                                  Title:
                                        ---------------------------------------



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