##### Table of Contents





UNITED STATES
 SECURITIES AND EXCHANGE
    COMMISSION
 Washington, D.C.
    20549
  Form 10-K
 (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2009oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from           to   Commission File Number:
    001-16295
 ENCORE ACQUISITION
    COMPANY
 (Exact name of registrant as
    specified in its charter)
  Delaware

75-2759650(State or other jurisdiction
    of incorporation or organization)

(I.R.S. Employer
    Identification No.)777 Main Street, Suite 1400, Fort Worth, Texas

76102(Address of principal executive
    offices)

(Zip Code)   Registrants telephone number, including area code:
    (817) 877-9955
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of each class

Name of each exchange on which registeredCommon Stock

New York Stock ExchangeRights to Purchase Series A Junior Participating Preferred
    Stock

New York Stock Exchange   Securities registered pursuant to Section 12(g) of the
    Act: None
  þ o
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
  Large accelerated filer þ

Accelerated filer o

Non-accelerated filer o

Smaller reporting company o(Do not check if a smaller reporting company)   Rule 12b-2 o þ
  Aggregate market value of the voting and non-voting common
    equity held by non-affiliates computed by reference to the price
    at which the common equity of the registrant was last sold as of
    June 30, 2009 (the last business day of the
    registrantsmost recently completed second fiscal quarter)

$
1,522,208,999Number of shares of Common Stock, $0.01 par value,
    outstanding as of February 17, 2010


55,988,169   DOCUMENTS INCORPORATED BY REFERENCE:
  None




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##### 





ENCORE
    ACQUISITION COMPANY
   INDEX
   
  PagePART IItems 1. and 2.

Business and Properties


1Item 1A.

Risk Factors


23Item 1B.

Unresolved Staff Comments


34Item 3.

Legal Proceedings


34Item 4.

Submission of Matters to a Vote of Security
    Holders


34PART IIItem 5.

Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


35Item 6.

Selected Financial Data


37Item 7.

Managements Discussion and Analysis of
    Financial Condition and Results of Operations


40Item 7A.

Quantitative and Qualitative Disclosures About
    Market Risk


72Item 8.

Financial Statements and Supplementary Data


76Item 9.

Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosure


144Item 9A.

Controls and Procedures


144Item 9B.

Other Information


146PART IIIItem 10.

Directors, Executive Officers and Corporate
    Governance


146Item 11.

Executive Compensation


153Item 12.

Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


167Item 13.

Certain Relationships and Related Transactions,
    and Director Independence


169Item 14.

Principal Accountant Fees and Services


170PART IVItem 15.

Exhibits and Financial Statement Schedules


171EX-12.1EX-21.1EX-23.1EX-23.2EX-31.1EX-31.2EX-32.1EX-32.2EX-99.1   i




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  GLOSSARY
  Form 10-K Rule 4-10(a)(2-4) Regulation S-X.
  
    ASC.  FASB Accounting Standards Codification.
    Bbl.  One stock tank barrel, or 42
    U.S. gallons liquid volume, used in reference to oil or
    other liquid hydrocarbons.
    Bbl/D.  One Bbl per day.
    Bcf.  One billion cubic feet, used in reference
    to natural gas.
    BOE.  One barrel of oil equivalent, calculated
    by converting natural gas to oil equivalent barrels at a ratio
    of six Mcf of natural gas to one Bbl of oil.
    BOE/D.  One BOE per day.
    CO2.  Carbon
    dioxide.
    Completion.  The installation of permanent
    equipment for the production of oil or natural gas.
    Council of Petroleum Accountants Societies
    (COPAS).  A professional organization
    of oil and gas accountants that maintains consistency in
    accounting procedures and interpretations, including the
    procedures that are part of most joint operating agreements.
    These procedures establish a drilling rate and an overhead rate
    to reimburse the operator of a well for overhead costs, such as
    accounting and engineering.
    Delay Rentals.  Fees paid to the lessor of an
    oil and natural gas lease during the primary term of the lease
    prior to the commencement of production from a well.
    Developed Acreage.  The number of acres
    allocated or assignable to producing wells or wells capable of
    production.
    Development Well.  A well drilled within the
    proved area of an oil or natural gas reservoir to the depth of a
    stratigraphic horizon known to be productive.
    Dry Hole.  An exploratory, development, or
    extension well that proves to be incapable of producing either
    oil or natural gas in sufficient quantities to justify
    completion as an oil or natural gas well.
    EAC.  Encore Acquisition Company, a publicly
    traded Delaware corporation, together with its subsidiaries.
    ENP.  Encore Energy Partners LP, a publicly
    traded Delaware limited partnership, together with its
    subsidiaries.
    EOR.  Enhanced oil recovery.
    Exploratory Well.  A well drilled to find a new
    field or to find a new reservoir in a field previously producing
    oil or natural gas in another reservoir.
    Extension Well.  A well drilled to extend the
    limits of a known reservoir.
    Farm-out.  Transfer of all or part of the
    operating rights from the working interest holder to an
    assignee, who assumes all or some of the burden of development,
    in return for an interest in the property. The assignor usually
    retains an overriding royalty, but may retain any type of
    interest.
    FASB.  Financial Accounting Standards Board. ii




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
   
    Field.  An area consisting of a single
    reservoir or multiple reservoirs, all grouped on or related to
    the same individual geological structural feature
    and/or
    stratigraphic condition.
    GAAP.  Accounting principles generally accepted
    in the United States.
    Gross Acres or Gross Wells.  The total acres or
    wells, as the case may be, in which an entity owns a working
    interest.
    Horizontal Drilling.  A drilling operation in
    which a portion of a well is drilled horizontally within a
    productive or potentially productive formation, which usually
    yields a well which has the ability to produce higher volumes
    than a vertical well drilled in the same formation.
    Lease Operating Expense (LOE).  All
    direct and allocated indirect costs of producing hydrocarbons
    after completion of drilling and before commencement of
    production. Such costs include labor, superintendence, supplies,
    repairs, maintenance, and direct overhead charges.
    LIBOR.  London Interbank Offered Rate.
    MBbl.  One thousand Bbls.
    MBOE.  One thousand BOE.
    MBOE/D.  One thousand BOE per day.
    Mcf.  One thousand cubic feet, used in
    reference to natural gas.
    Mcf/D.  One Mcf per day.
    Mcfe.  One Mcf equivalent, calculated by
    converting oil to natural gas equivalent at a ratio of one Bbl
    of oil to six Mcf of natural gas.
    Mcfe/D.  One Mcfe per day.
    MMBbl.  One million Bbls.
    MMBOE.  One million BOE.
    MMBtu.  One million British thermal units. One
    British thermal unit is the quantity of heat required to raise
    the temperature of a one-pound mass of water by one degree
    Fahrenheit.
    MMcf.  One million cubic feet, used in
    reference to natural gas.
    Natural Gas Liquids (NGLs).  The
    combination of ethane, propane, butane, and natural gasolines
    that when removed from natural gas become liquid under various
    levels of higher pressure and lower temperature.
    Net Acres or Net Wells.  Gross acres or wells,
    as the case may be, multiplied by the working interest
    percentage owned by an entity.
    Net Production.  Production owned by an entity
    less royalties, net profits interests, and production due others.
    Net Profits Interest.  An interest that
    entitles the owner to a specified share of net profits from the
    production of hydrocarbons.
    NYMEX.  New York Mercantile Exchange.
    NYSE.  The New York Stock Exchange.
    Oil.  Crude oil, condensate, and NGLs.
    Operator.  The entity responsible for the
    exploration, development, and production of a well or lease. iii




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
   
    Present Value of Future Net Revenues
    (PV-10).  The
    present value of estimated future revenues to be generated from
    the production of proved reserves, net of estimated future
    production and development costs, using prices and costs as of
    the date of estimation without future escalation, without giving
    effect to commodity derivative activities, non-property related
    expenses such as general and administrative expenses, debt
    service, depletion, depreciation, and amortization, and income
    taxes, discounted at an annual rate of 10 percent.
    Production Margin.  Wellhead revenues less
    production costs.
    Production Taxes.  Production expense
    attributable to production, ad valorem, and severance taxes.
    Productive Well.  A well capable of producing
    hydrocarbons in commercial quantities, including natural gas
    wells awaiting pipeline connections to commence deliveries and
    oil wells awaiting connection to production facilities.
    Proved Developed Reserves.  Proved reserves
    that can be expected to be recovered from existing wells with
    existing equipment and operating methods or in which the cost of
    the required equipment is relatively minor compared to the cost
    of a new well.
    Proved Reserves.  The estimated quantities of
    hydrocarbons, which, by analysis of geoscience and engineering
    data, can be estimated with reasonable certainty to be
    economically producible from a given date forward from known
    reservoirs under existing conditions and operating methods.
    Proved Undeveloped Reserves.  Proved reserves
    that are expected to be recovered from new wells on undrilled
    acreage for which the existence and recoverability of such
    reserves can be estimated with reasonable certainty, or from
    existing wells where a relatively major expenditure is required
    for recompletion. Includes unrealized production response from
    enhanced recovery techniques that have been proved effective by
    projects in the same reservoir or an analogous reservoir, or by
    other evidence using reliable technology establishing reasonable
    certainty.
    Recompletion.  The completion for production of
    an existing well bore in another formation from that in which
    the well has been previously completed.
    Reliable Technology.  A grouping of one or more
    technologies (including computational methods) that have been
    field tested and have been demonstrated to provide reasonably
    certain results with consistency and repeatability in the
    formation being evaluated or in an analogous formation.
    Reserves.  Reserves are estimated remaining
    quantities of oil and natural gas and related substances
    anticipated to the economically producible, as of a given date,
    by application of development projects to known accumulations.
    In addition, there must exist, or there must be a reasonable
    expectation that there will exist, the legal right to produce or
    a revenue interest in the production, installed means of
    delivering oil and gas or related substances to market, and all
    permits and financing required to implement the project.
    Reservoir.  A porous and permeable underground
    formation containing a natural accumulation of producible
    hydrocarbons that is confined by impermeable rock or water
    barriers and is individual and separate from other reservoirs.
    Royalty.  An interest in an oil and natural gas
    lease that gives the owner the right to receive a portion of the
    production from the leased acreage (or of the proceeds from the
    sale thereof), but does not require the owner to pay any portion
    of the production or development costs on the leased acreage.
    Royalties may be either landowners royalties, which are
    reserved by the owner of the leased acreage at the time the
    lease is granted, or overriding royalties, which are usually
    reserved by an owner of the leasehold in connection with a
    transfer to a subsequent owner.
    SEC.  The United States Securities and Exchange
    Commission. iv




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
   
    Secondary Recovery.  Enhanced recovery of
    hydrocarbons from a reservoir beyond the hydrocarbons that can
    be recovered by normal flowing and pumping operations. Involves
    maintaining or enhancing reservoir pressure by injecting water,
    gas, or other substances into the formation in order to displace
    hydrocarbons toward the wellbore. The most common secondary
    recovery techniques are gas injection and waterflooding.
    SFAS.  Statement of Financial Accounting
    Standards.
    Standardized Measure.  Future cash inflows from
    proved reserves, less future production costs, development
    costs, net abandonment costs, and income taxes, discounted at
    10 percent per annum to reflect the timing of future net
    cash flows. Standardized Measure differs from
    PV-10
    because Standardized Measure includes the effect of estimated
    future net abandonment costs and income taxes.
    Tertiary Recovery.  An enhanced recovery
    operation that normally occurs after waterflooding in which
    chemicals or natural gases are used as the injectant.
    Undeveloped Acreage.  Lease acreage on which
    wells have not been drilled or completed to a point that would
    permit the production of economic quantities of oil or natural
    gas regardless of whether such acreage contains proved reserves.
    Unit.  A specifically defined area within which
    acreage is treated as a single consolidated lease for operations
    and for allocations of costs and benefits without regard to
    ownership of the acreage. Units are established for the purpose
    of recovering hydrocarbons from specified zones or formations.
    Waterflood.  A secondary recovery operation in
    which water is injected into the producing formation in order to
    maintain reservoir pressure and force oil toward and into the
    producing wells.
    Working Interest.  An interest in an oil or
    natural gas lease that gives the owner the right to drill for
    and produce hydrocarbons on the leased acreage and requires the
    owner to pay a share of the production and development costs.
    Workover.  Operations on a producing well to
    restore or increase production. v




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
   PART I ITEMS 1
    and 2. BUSINESS AND PROPERTIES  General
  Our Business.
  
    the Cedar Creek Anticline (CCA) in the Williston
    Basin in Montana and North Dakota;
    the Permian Basin in West Texas and southeastern New Mexico;
    the Rockies, which includes non-CCA assets in the Williston, Big
    Horn, and Powder River Basins in Wyoming, Montana, and North
    Dakota, and the Paradox Basin in southeastern Utah; and
    the Mid-Continent area, which includes the Arkoma and Anadarko
    Basins in Arkansas and Oklahoma, the North Louisiana Salt Basin,
    and the East Texas Basin.    Merger with Denbury.
  Proved Reserves.
  Most Valuable Asset.
 1




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  Drilling.
  ENP.
    Financial Information About Operating
    Segments.
  Operations
  Well
    Operations
  day-to-day
   2




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  Natural
    Gas Gathering
    
    realize faster connection of newly drilled wells to the existing
    system;
    control pipeline operating pressures and capacity to maximize
    our production;
    control compression costs and fuel use;
    maintain system integrity;
    control the monthly nominations on the receiving pipelines to
    prevent imbalances and penalties; and
    track sales volumes and receipts closely to assure all
    production values are realized.  Seasonal
    Nature of Business
   3




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  Production
    and Price History
    Year Ended December 31,2009

2008

2007Total Production Volumes:Oil (MBbls)


10,016



10,050



9,545Natural gas (MMcf)


33,919



26,374



23,963Combined (MBOE)


15,669



14,446



13,539Average Daily Production Volumes:Oil (Bbls/D)


27,441



27,459



26,152Natural gas (Mcf/D)


92,928



72,060



65,651Combined (BOE/D)


42,929



39,470



37,094Average Realized Prices:Oil (per Bbl)

$
54.85


$
89.30


$
58.96Natural gas (per Mcf)


3.87



8.63



6.26Combined (per BOE)


43.43



77.87



52.66Average Costs per BOE:Lease operating

$
10.53


$
12.12


$
10.59Production, ad valorem, and severance taxes


4.44



7.66



5.51Depletion, depreciation, and amortization


18.56



15.80



13.59Impairment of long-lived assets


0.64



4.12



Exploration


3.35



2.71



2.05Derivative fair value loss (gain)


3.80



(23.97
)


8.31General and administrative


3.45



3.35



2.89Provision for doubtful accounts


0.49



0.14



0.43Other operating


1.64



0.90



1.26Marketing, net of revenues


(0.05
)


(0.06
)


(0.11
)   Productive
    Wells
    Oil Wells


Natural Gas WellsAverage








AverageGross


Net


Working


Gross


Net


WorkingWells(a)


Wells


Interest


Wells(a)


Wells


InterestCCA


729



645.2



89
%


23



6.3



27
%Permian Basin


1,969



772.2



39
%


692



353.5



51
%Rockies


1,476



851.7



58
%


42



29.7



71
%Mid-Continent


484



282.6



58
%


1,355



569.7



42
%Total


4,658



2,551.7



55
%


2,112



959.2



45
%     (a)
    
    Our total wells include 3,810 operated wells and 2,960
    non-operated wells. At December 31, 2009, 62 of our wells
    had multiple completions. 4




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
   Acreage
    Gross


NetAcreage


AcreageCCA:Developed


93,563



94,607Undeveloped


159,264



133,107252,827



227,714Permian Basin:Developed


81,248



53,788Undeveloped


25,242



23,449106,490



77,237Rockies:Developed


235,535



160,024Undeveloped


375,704



245,170611,239



405,194Mid-Continent:Developed


189,778



101,900Undeveloped


292,504



205,703482,282



307,603Total:Developed


600,124



410,319Undeveloped


852,714



607,4291,452,838



1,017,748  5




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  Development
    Results
    Year Ended December 31,2009


2008


2007Gross


Net


Gross


Net


Gross


NetDevelopment Wells:Productive


57



25.9



186



73.4



165



61.7Dry holes


1



1.0



5



3.1



5



3.358



26.9



191



76.5



170



65.0Exploratory Wells:Productive


55



16.4



96



31.4



63



20.9Dry holes


7



5.6



8



3.8



5



2.662



22.0



104



35.2



68



23.5Total:Productive


112



42.3



282



104.8



228



82.6Dry holes


8



6.6



13



6.9



10



5.9120



48.9



295



111.7



238



88.5   Present
    Activities
    Delivery
    Commitments and Marketing Arrangements
     6




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
      First Quarter

Second Quarter

Third Quarter

Fourth Quarterof 2009

of 2009

of 2009

of 2009Average oil wellhead to NYMEX percentage


82
%


92
%


89
%


89
%Average natural gas wellhead to NYMEX percentage


67
%


105
%


109
%


112
%     Principal
    Customers
    Competition
       7




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  Properties
  Nature
    of Our Ownership Interests
    Production


AverageNatural





Percent


Average Oil


Natural Gas


LeaseOil


Gas


Total


of Total


Wellhead


Wellhead


Operating(MBbls)


(MMcf)


(MBOE)





(per Bbl)


(per Mcf)


(per BOE)2009CCA


3,786



889



3,934



25
%

$
55.41


$
3.87


$
12.64Permian Basin


1,217



15,182



3,748



24
%


56.73



3.98



8.32Rockies


4,410



2,035



4,749



30
%


53.46



3.96



12.66Mid-Continent


603



15,813



3,238



21
%


57.77



3.74



7.43Total


10,016



33,919



15,669



100
%


54.85



3.87



10.532008CCA


4,146



978



4,309



30
%


88.66



8.35



12.62Permian Basin


1,246



12,442



3,320



23
%


95.34



8.65



11.96Rockies


4,256



1,870



4,567



32
%


88.15



9.02



13.80Mid-Continent


402



11,084



2,250



15
%


96.28



8.55



8.02Total


10,050



26,374



14,446



100
%


89.58



8.63



12.122007CCA


4,426



1,122



4,614



34
%


62.72



5.31



10.16Permian Basin


1,214



8,937



2,703



20
%


67.88



7.03



11.97Rockies


3,434



1,368



3,662



27
%


62.61



6.31



12.15Mid-Continent


471



12,536



2,560



19
%


65.98



6.62



7.69Total


9,545



23,963



13,539



100
%


63.50



6.69



10.59  8




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
    Natural





PercentOil


Gas


Total


of Total(MBbls)


(MMcf)


(MBOE)Proved Developed:CCA


60,227



12,708



62,345



36
%Permian Basin


14,408



127,620



35,678



20
%Rockies


39,274



15,448



41,849



24
%Mid-Continent


7,492



166,646



35,266



20
%Total Proved Developed


121,401



322,422



175,138



100
%Proved Undeveloped:CCA


7,777



675



7,890



17
%Permian Basin


5,641



38,886



12,122



27
%Rockies


11,469



6,725



12,590



28
%Mid-Continent


806



70,364



12,533



28
%Total Proved Undeveloped


25,693



116,650



45,135



100
%Total Proved:CCA


68,004



13,383



70,235



32
%Permian Basin


20,049



166,506



47,800



22
%Rockies


50,743



22,173



54,439



24
%Mid-Continent


8,298



237,010



47,799



22
%Total Proved


147,094



439,072



220,273



100
%   PV-10
  Amount(a)


Percent of Total(In thousands)CCA

$
786,720



37
%Permian Basin


419,346



20
%Rockies


671,483



31
%Mid-Continent


263,488



12
%Total

$
2,141,037



100
%     (a)
    
    Giving effect to commodity derivative contracts, our
    PV-10 would
    decrease by $23.4 million at December 31, 2009.
    Standardized Measure at December 31, 2009 was
    $1.7 billion. Standardized Measure differs from
    PV-10 by
    approximately $414.0 million because Standardized Measure
    includes the effects of future net abandonment costs and future
    income taxes. Since we are taxed at the corporate level, future
    income taxes are determined on a combined property basis and
    cannot be accurately subdivided among our core areas. Therefore,
    we believe
    PV-10
    provides the best method for assessing the relative value of
    each of our areas.  Recent SEC Rule-Making Activity. 12-month
 9




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
        Proved Undeveloped Reserves
    (PUDs).
      
    reclassifications of PUDs into proved developed reserves for
    implementation of drilling projects and response to
    secondary/tertiary recovery projects;
    additions of PUDs due to proving up additional drilling
    locations and changes in PUDs definition under the new SEC
    rules; and
    negative revisions in PUDs due to changes in commodity prices.  Drilling Plans.
  Internal Controls Over Reserves Estimates.
     10




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
    PV-10
  Other Reserve Information. Form EIA-23. Form EIA-23,
  
 11




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  CCA
    Properties
    two-to-six-mile-wide
      2 2 2
  18-month
  Net Profits Interest.
  Permian
    Basin Properties
  West Texas.
 12




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
            New Mexico.
  Mid-Continent
    Properties
  Oklahoma, Arkansas, and Kansas.
  North Louisiana Salt Basin and East Texas
    Basin.
 13




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
        Rockies
    Properties
  Big Horn Basin.
      Williston Basin.
    Bell Creek.
 14




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
    2 2 2 2 2 2
  Paradox Basin.
    Title to
    Properties
      
    royalties, overriding royalties, net profits interests, and
    other burdens under oil and natural gas leases;
    contractual obligations, including, in some cases, development
    obligations arising under joint operating agreements, farm-out
    agreements, production sales contracts, and other agreements
    that may affect the properties or their titles;
    liens that arise in the normal course of operations, such as
    those for unpaid taxes, statutory liens securing unpaid
    suppliers and contractors, and contractual liens under joint
    operating agreements;
    pooling, unitization, and communitization agreements,
    declarations, and orders; and
    easements, restrictions,
    rights-of-way,
    and other matters that commonly affect property.      Environmental
    Matters and Regulation
  General.
  
    require the acquisition of various permits before development
    commences;
    require the installation of pollution control equipment; 15




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ENCORE
    ACQUISITION COMPANY
   
    enjoin some or all of the operations of facilities deemed in
    non-compliance with permits;
    restrict the types, quantities, and concentration of various
    substances that can be released into the environment in
    connection with oil and natural gas development, production, and
    transportation activities;
    restrict the way in which wastes are handled and disposed;
    limit or prohibit development activities on certain lands lying
    within wilderness, wetlands, areas inhabited by threatened or
    endangered species, and other protected areas;
    require remedial measures to mitigate pollution from former and
    ongoing operations, such as requirements to close pits and plug
    abandoned wells;
    impose substantial liabilities for pollution resulting from
    operations; and
    require preparation of a Resource Management Plan, an
    Environmental Assessment,
    and/or an
    Environmental Impact Statement for operations affecting federal
    lands or leases.      Waste Handling.
  Site Remediation.
 16




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ENCORE
    ACQUISITION COMPANY
        Water Discharges.
 17




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ENCORE
    ACQUISITION COMPANY
      Air Emissions.
    Massachusetts,
    et al. v. EPA Massachusetts
  Activities on Federal Lands.
 18




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ENCORE
    ACQUISITION COMPANY
    Occupational Safety and Health Act (OSH Act) and
    Other Laws and Regulation. right-to-know and/or
    Other
    Regulation of the Oil and Natural Gas Industry
      Development and Production.
  
    location of wells;
    methods of developing and casing wells;
    surface use and restoration of properties upon which wells are
    drilled;
    plugging and abandoning of wells; and
    notification of surface owners and other third parties.   19




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ENCORE
    ACQUISITION COMPANY
    Natural Gas Gathering.
    Sales of Natural Gas.
   20




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ENCORE
    ACQUISITION COMPANY
  State Regulation.
      Federal, State, or Native American Leases. on-site
  Operating
    Hazards and Insurance
      Employees
    Principal
    Executive Office
  (817) 877-9955.
  Available
    Information
  www.encoreacq.com Form 10-K, Form 10-Q, Form 8-K,
 21




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ENCORE
    ACQUISITION COMPANY
  1-800-SEC-0330. www.sec.gov
       22




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ENCORE
    ACQUISITION COMPANY
  ITEM 1A.
    RISK
    FACTORS  You should carefully consider each of the following risks and
    all of the information provided elsewhere in this Report. If any
    of the risks described below or elsewhere in this Report were
    actually to occur, our business, financial condition, results of
    operations, or cash flows could be materially and adversely
    affected. In that case, we may be unable to pay interest on, or
    the principal of, our debt securities, the trading price of our
    common stock could decline, and you could lose all or part of
    your investment.
  Failure
    to complete the Merger or delays in completing the Merger could
    negatively affect our stock price and future business and
    operations.
    
    we will not realize the benefits expected from the Merger,
    including a potentially enhanced financial and competitive
    position;
    the current market price of our common stock may reflect a
    market assumption that the Merger will occur and a failure to
    complete the Merger could result in a negative perception by the
    stock market of us generally and a resulting decline in the
    market price of our common stock; and
    certain costs relating to the Merger, including certain
    investment banking, financing, legal, and accounting fees and
    expenses, must be paid even if the Merger is not completed, and
    we may be required to pay substantial fees to Denbury if the
    Merger Agreement is terminated under specified circumstances.    There
    may be substantial disruption to our business and distraction of
    our management and employees as a result of the
    Merger.
  day-to-day
  Business
    uncertainties and contractual restrictions while the Merger is
    pending may have an adverse effect on us.
    Our
    oil and natural gas reserves naturally decline and the failure
    to replace our reserves could adversely affect our financial
    condition.
   23




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ENCORE
    ACQUISITION COMPANY
      Oil
    and natural gas prices are very volatile. A decline in commodity
    prices could materially and adversely affect our financial
    condition, results of operations, liquidity, and cash
    flows.
    
    overall domestic and global economic conditions;
    weather conditions;
    political and economic conditions in oil and natural gas
    producing countries, including those in the Middle East, Africa,
    and South America;
    actions of the Organization of Petroleum Exporting Countries and
    state-controlled oil companies relating to oil price and
    production controls;
    the impact of U.S. dollar exchange rates on oil and natural
    gas prices;
    technological advances affecting energy consumption and energy
    supply;
    domestic and foreign governmental regulations and taxation;
    the impact of energy conservation efforts;
    the proximity, capacity, cost, and availability of oil and
    natural gas pipelines and other transportation facilities;
    the availability of refining capacity; and
    the price and availability of alternative fuels.      
    negatively impact the value of our reserves, because declines in
    oil and natural gas prices would reduce the amount of oil and
    natural gas that we can produce economically;
    reduce the amount of cash flow available for capital
    expenditures, repayment of indebtedness, and other corporate
    purposes; and
    result in a decrease in the borrowing base under our revolving
    credit facility or otherwise limit our ability to borrow money
    or raise additional capital. 24




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ENCORE
    ACQUISITION COMPANY
   An
    increase in the differential between benchmark prices of oil and
    natural gas and the wellhead price we receive could adversely
    affect our financial condition, results of operations, and cash
    flows.
    Price
    declines may result in a write-down of our asset carrying
    values, which could have a material adverse effect on our
    results of operations and limit our ability to borrow funds
    under our revolving credit facility.
    Our
    commodity derivative contract activities could result in
    financial losses or could reduce our income and cash flows.
    Furthermore, in the future, our commodity derivative contract
    positions may not adequately protect us from changes in
    commodity prices.
      
    a counterparty may not perform its obligation under the
    applicable derivative instrument, which risk may have been
    exacerbated by the worldwide financial and credit
    crisis; and
    there may be a change in the expected differential between the
    underlying commodity price in the derivative instrument and the
    actual price received, which may result in payments to our
    derivative counterparty that are not accompanied by our receipt
    of higher prices from our production in the field. 25




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ENCORE
    ACQUISITION COMPANY
       The
    counterparties to our derivative contracts may not be able to
    perform their obligations to us, which could materially affect
    our cash flows and results of operations.
    Our
    estimated proved reserves are based on many assumptions that may
    prove to be inaccurate. Any material inaccuracies in these
    reserve estimates or underlying assumptions will materially
    affect the quantities and present value of our
    reserves.
         26




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ENCORE
    ACQUISITION COMPANY
    Developing
    and producing oil and natural gas are costly and high-risk
    activities with many uncertainties that could adversely affect
    our financial condition or results of operations.
    
    higher costs, shortages, or delivery delays of rigs, equipment,
    labor, or other services;
    unexpected operational events
    and/or
    conditions;
    reductions in oil and natural gas prices;
    increases in severance taxes;
    limitations in the market for oil and natural gas;
    adverse weather conditions and natural disasters;
    facility or equipment malfunctions, and equipment failures or
    accidents;
    title problems;
    pipe or cement failures and casing collapses;
    compliance with environmental and other governmental
    requirements;
    environmental hazards, such as natural gas leaks, oil spills,
    pipeline ruptures, and discharges of toxic gases;
    lost or damaged oilfield development and service tools;
    unusual or unexpected geological formations, and pressure or
    irregularities in formations;
    loss of drilling fluid circulation;
    fires, blowouts, surface craterings, and explosions;
    uncontrollable flows of oil, natural gas, or well
    fluids; and
    loss of leases due to incorrect payment of royalties.    Secondary
    and tertiary recovery techniques may not be successful, which
    could adversely affect our financial condition or results of
    operations.
   27




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ENCORE
    ACQUISITION COMPANY
    
    lower than expected production;
    longer response times;
    higher operating and capital costs;
    shortages of equipment; and
    lack of technical expertise.    Shortages
    of rigs, equipment, and crews could delay our
    operations.
    If we
    do not make acquisitions, our future growth could be
    limited.
    
    unable to identify attractive acquisition candidates or
    negotiate acceptable purchase contracts with them;
    unable to obtain financing for these acquisitions on
    economically acceptable terms; or
    outbid by competitors.    Any
    acquisitions we complete are subject to substantial risks that
    could adversely affect our financial condition and results of
    operations.
    
    the validity of our assumptions about reserves, future
    production, revenues, capital expenditures, and operating costs,
    including synergies;
    an inability to integrate the businesses we acquire successfully;
    a decrease in our liquidity by using a significant portion of
    our available cash or borrowing capacity under our revolving
    credit facility to finance acquisitions;
    a significant increase in our interest expense or financial
    leverage if we incur additional debt to finance acquisitions; 28




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ENCORE
    ACQUISITION COMPANY
   
    the assumption of unknown liabilities, losses, or costs for
    which we are not indemnified or for which our indemnity is
    inadequate;
    the diversion of managements attention from other business
    concerns;
    an inability to hire, train, or retain qualified personnel to
    manage and operate our growing business and assets;
    natural disasters;
    the incurrence of other significant charges, such as impairment
    of oil and natural gas properties, goodwill, or other intangible
    assets, asset devaluation, or restructuring charges;
    unforeseen difficulties encountered in operating in new
    geographic areas; and
    customer or key employee losses at the acquired businesses.      A
    substantial portion of our producing properties is located in
    one geographic area and adverse developments in any of our
    operating areas would negatively affect our financial condition
    and results of operations.
    We
    depend on certain customers for a substantial portion of our
    sales. If these customers reduce the volumes of oil and natural
    gas they purchase from us, our revenues and cash available for
    distribution will decline to the extent we are not able to find
    new customers for our production.
    Competition
    in the oil and natural gas industry is intense and many of our
    competitors have greater resources than we do. As a result, we
    may be unable to effectively compete with larger
    competitors.
   29




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ENCORE
    ACQUISITION COMPANY
    We
    have significant indebtedness and may incur significant
    additional indebtedness, which could negatively impact our
    financial condition, results of operations, and business
    prospects.
    
    our ability to obtain additional financing, if necessary, for
    working capital, capital expenditures, acquisitions, or other
    purposes may not be available on favorable terms, if at all;
    covenants contained in future debt arrangements may require us
    to meet financial tests that may affect our flexibility in
    planning for and reacting to changes in our business, including
    possible acquisition opportunities;
    we will need a substantial portion of our cash flow to make
    principal and interest payments on our indebtedness, reducing
    the funds that would otherwise be available for operations and
    future business opportunities; and
    our debt level will make us more vulnerable to competitive
    pressures, or a downturn in our business or the economy in
    general, than our competitors with less debt.  and/or
    We are
    unable to predict the impact of the recent downturn in the
    credit markets and the resulting costs or constraints in
    obtaining financing on our business and financial
    results.
   30




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ENCORE
    ACQUISITION COMPANY
    Our
    revolving credit facilities have substantial restrictions and
    financial covenants that may restrict our business and financing
    activities.
        Our
    operations are subject to operational hazards and unforeseen
    interruptions for which we may not be adequately
    insured.
     31




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ENCORE
    ACQUISITION COMPANY
   Our
    business depends in part on gathering and transportation
    facilities owned by others. Any limitation in the availability
    of those facilities could interfere with our ability to market
    our oil and natural gas production and could harm our
    business.
    We
    have limited control over the activities on properties we do not
    operate.
    We are
    subject to complex federal, state, local, and other laws and
    regulations that could adversely affect the cost, manner, or
    feasibility of conducting our operations.
      Possible
    regulations related to global warming and climate change could
    have an adverse effect on our operations and the demand for oil
    and natural gas.
  and/or
 32




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ENCORE
    ACQUISITION COMPANY
    Our
    operations expose us to significant costs and liabilities with
    respect to environmental and operational safety
    matters.
      Our
    development and exploratory drilling efforts may not be
    profitable or achieve our targeted returns.
        Our
    development, exploitation, and exploration operations require
    substantial capital, and we may be unable to obtain needed
    financing on satisfactory terms.
   33




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ENCORE
    ACQUISITION COMPANY
    The
    loss of key personnel could adversely affect our
    business.
    ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    ITEM 3.
    LEGAL
    PROCEEDINGS    Litigation
    Related to the Merger
    Sanjay Israni, Individually and On Behalf of All
    Others Similarly Situated vs. Encore Acquisition Company et al.
  Teamsters Allied Benefit Funds, Individually and On
    Behalf of All Others Similarly Situated vs. Encore Acquisition
    Company et al.
  Thomas W. Scott, Jr., individually and on
    behalf of all others similarly situated v. Encore
    Acquisition Company et al.
  Teamsters Scott Teamsters Scott Teamsters
  ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   34




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ENCORE
    ACQUISITION COMPANY
  PART II  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES    High


Low2009Quarter ended December 31

$
49.00


$
35.64Quarter ended September 30

$
39.93


$
25.53Quarter ended June 30

$
39.01


$
22.30Quarter ended March 31

$
32.11


$
17.042008Quarter ended December 31

$
41.05


$
17.89Quarter ended September 30

$
79.62


$
36.84Quarter ended June 30

$
77.35


$
38.45Quarter ended March 31

$
40.74


$
26.10     Purchases
    of Equity Securities by the Issuer and Affiliated
    Purchasers
    Dividends
   35




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ENCORE
    ACQUISITION COMPANY
  Stock
    Performance Graph
    Comparison
    of Total Return Since January 1, 2005 Among Encore
    Acquisition Company, the Standard & Poors 500
    Index, and the
    Independent Oil and Gas Index
  
 36




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ENCORE
    ACQUISITION COMPANY
  ITEM 6.
    SELECTED
    FINANCIAL DATA    Year Ended December 31,(a)2009


2008


2007


2006


2005(In thousands, except per share amounts)Consolidated Statements of Operations Data:Revenues(b):Oil

$
549,391


$
897,443


$
562,817


$
346,974


$
307,959Natural gas


131,185



227,479



150,107



146,325



149,365Marketing(c)


4,840



10,496



42,021



147,563



Total revenues


685,416



1,135,418



754,945



640,862



457,324Expenses:Production:Lease operating(d)


165,062



175,115



143,426



98,194



69,744Production, ad valorem, and severance taxes


69,539



110,644



74,585



49,780



45,601Depletion, depreciation, and amortization


290,776



228,252



183,980



113,463



85,627Impairment of long-lived assets(e)


9,979



59,526











Exploration


52,488



39,207



27,726



30,519



14,443General and administrative(d)


54,024



48,421



39,124



23,194



17,268Marketing(c)


3,994



9,570



40,549



148,571



Derivative fair value loss (gain)(f)


59,597



(346,236
)


112,483



(24,388
)


5,290Loss on early redemption of debt(g)


















19,477Provision for doubtful accounts


7,686



1,984



5,816



1,970



231Other operating


25,761



12,975



17,066



8,053



9,254Total expenses


738,906



339,458



644,755



449,356



266,935Operating income (loss)


(53,490
)


795,960



110,190



191,506



190,389Other income (expenses):Interest


(79,017
)


(73,173
)


(88,704
)


(45,131
)


(34,055
)Other


2,447



3,898



2,667



1,429



1,039Total other expenses


(76,570
)


(69,275
)


(86,037
)


(43,702
)


(33,016
)Income (loss) before income taxes


(130,060
)


726,685



24,153



147,804



157,373Income tax benefit (provision)


32,173



(241,621
)


(14,476
)


(55,406
)


(53,948
)Consolidated net income (loss)


(97,887
)


485,064



9,677



92,398



103,425Less: net loss (income) attributable to noncontrolling interest


16,752



(54,252
)


7,478







Net income (loss) attributable to EAC stockholders

$
(81,135
)

$
430,812


$
17,155


$
92,398


$
103,425Net income (loss) per common share:Basic

$
(1.54
)

$
8.10


$
0.32


$
1.75


$
2.10Diluted

$
(1.54
)

$
8.01


$
0.31


$
1.74


$
2.07Weighted average common shares outstanding:Basic


52,634



52,270



53,170



51,865



48,682Diluted


52,634



52,866



53,629



52,356



49,303 37




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ENCORE
    ACQUISITION COMPANY
  Year Ended December 31,(a)2009


2008


2007


2006


2005(In thousands, except per unit amounts)Total Production Volumes:Oil (Bbls)


10,016



10,050



9,545



7,335



6,871Natural gas (Mcf)


33,919



26,374



23,963



23,456



21,059Combined (BOE)


15,669



14,446



13,539



11,244



10,381Average Realized Prices:Oil ($/Bbl)

$
54.85


$
89.30


$
58.96


$
47.30


$
44.82Natural gas ($/Mcf)


3.87



8.63



6.26



6.24



7.09Combined ($/BOE)


43.43



77.87



52.66



43.87



44.05Average Costs per BOE:Lease operating(d)

$
10.53


$
12.12


$
10.59


$
8.73


$
6.72Production, ad valorem, and severance taxes


4.44



7.66



5.51



4.43



4.39Depletion, depreciation, and amortization


18.56



15.80



13.59



10.09



8.25Impairment of long-lived assets(e)


0.64



4.12











Exploration


3.35



2.71



2.05



2.71



1.39General and administrative(d)


3.45



3.35



2.89



2.06



1.67Derivative fair value loss (gain)(f)


3.80



(23.97
)


8.31



(2.17
)


0.51Provision for doubtful accounts


0.49



0.14



0.43



0.18



0.02Other operating


1.64



0.90



1.26



0.71



0.89Marketing, net of revenues(c)


(0.05
)


(0.06
)


(0.11
)


0.09



Consolidated Statements of Cash Flows Data:Cash provided by (used in):Operating activities

$
745,677


$
663,237


$
319,707


$
297,333


$
292,269Investing activities


(769,430
)


(728,346
)


(929,556
)


(397,430
)


(573,560
)Financing activities


35,672



65,444



610,790



99,206



281,842   As of December 31,(a)2009


2008


2007


2006


2005(In thousands)Proved Reserves:Oil (Bbls)


147,094



134,452



188,587



153,434



148,387Natural gas (Mcf)


439,072



307,520



256,447



306,764



283,865Combined (BOE)


220,273



185,705



231,328



204,561



195,698Consolidated Balance Sheets Data:Working capital

$
(62,854
)

$
188,678


$
(16,220
)

$
(40,745
)

$
(56,838
)Total assets


3,663,961



3,633,195



2,784,561



2,006,900



1,705,705Long-term debt


1,214,097



1,319,811



1,120,236



661,696



673,189Equity


1,630,833



1,483,248



1,070,689



816,865



546,781     (a)
    
    We acquired certain oil and natural gas properties and related
    assets in the Mid-Continent and east Texas regions in August
    2009. We acquired certain oil and natural gas properties and
    related assets in the Big Horn and Williston Basins in March
    2007 and April 2007, respectively. We also acquired Crusader
    Energy Corporation in October 2005. The operating results of
    these acquisitions are included in our Consolidated Statements
    of Operations from the date of acquisition forward. We disposed
    of certain oil and natural gas properties and related assets in
    the Mid-Continent in June 2007. The operating results of this
    disposition are included in our Consolidated Statements of
    Operations through the date of disposition.(b)
    
    For 2009, 2008, 2007, 2006, and 2005, we reduced oil and natural
    gas revenues for net profits interests owned by others by
    $31.8 million, $56.5 million, $32.5 million,
    $23.4 million, and $21.2 million, respectively. 38




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ENCORE
    ACQUISITION COMPANY
   (c)
    
    In 2006, we began purchasing third-party oil Bbls from a
    counterparty other than to whom the Bbls were sold for
    aggregation and sale with our own equity production in various
    markets. These purchases assisted us in marketing our production
    by decreasing our dependence on individual markets. These
    activities allowed us to aggregate larger volumes, facilitated
    our efforts to maximize the prices we received for production,
    provided for a greater allocation of future pipeline capacity in
    the event of curtailments, and enabled us to reach other
    markets. In 2007, we discontinued the purchase of oil from third
    party companies as market conditions changed and pipeline space
    was gained. Implementing this change allowed us to focus on the
    marketing of our own oil production, leveraging newly gained
    pipeline space, and delivering oil to various newly developed
    markets in an effort to maximize the value of the oil at the
    wellhead. In March 2007, ENP acquired a natural gas pipeline as
    part of the Big Horn Basin asset acquisition. Natural gas
    volumes are purchased from numerous gas producers at the inlet
    to the pipeline and resold downstream to various local and
    off-system markets.(d)
    
    On January 1, 2006, we adopted the provisions of ASC 718,
    505-50, and
    260-10-60-1A
    (formerly SFAS No. 123R, Share-Based
    Payment). Due to the adoption of ASC 718,
    505-50, and
    260-10-60-1A,
    non-cash equity-based compensation expense for 2005 has been
    reclassified to allocate the amount to the same respective
    income statement lines as the respective employees cash
    compensation. In 2005, this resulted in increases in LOE of
    $1.3 million ($0.13 per BOE) and in general and
    administrative (G&A) expense of
    $2.6 million ($0.25 per BOE).(e)
    
    During 2009 and 2008, circumstances indicated that the carrying
    value of certain of our oil and natural gas properties in the
    Tuscaloosa Marine Shale may not be recoverable. For the proved
    oil and natural gas property costs, we compared the assets
    carrying amounts to the undiscounted expected future net cash
    flows, which indicated a need for an impairment charge. We then
    compared the net carrying amounts of the impaired assets to
    their estimated fair value, which resulted in a pretax
    write-down of the value of oil and natural gas properties. For
    the unproved acreage costs, we recorded a valuation allowance to
    reflect the portion of the property costs that we believe will
    not be transferred to proved properties over the remaining life
    of the lease. The impairment of proved oil and natural gas
    properties and unproved acreage in the Tuscaloosa Marine Shale
    totaled $10.0 million and $59.5 million during 2009
    and 2008, respectively. Fair value was determined using
    estimates of future production volumes and estimates of future
    prices we might receive for these volumes, discounted to a
    present value.(f)
    
    During July 2006, we elected to discontinue hedge accounting
    prospectively for all of our remaining commodity derivative
    contracts which were previously accounted for as hedges. From
    that point forward, all
    mark-to-market
    gains or losses on all commodity derivative contracts are
    recorded in Derivative fair value loss (gain) while
    in periods prior to that point, only the ineffective portions of
    commodity derivative contracts which were designated as hedges
    were recorded in Derivative fair value loss (gain).(g)
    
    In 2005, we recorded a $19.5 million loss on early
    redemption of debt related to the redemption premium and the
    expensing of unamortized debt issuance costs of our
    83/8% Senior
    Subordinated Notes due 2012. We redeemed all $150 million
    of such notes with proceeds received from the issuance of
    $300 million of our 6.0% Senior Subordinated Notes due
    2015. 39




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ENCORE
    ACQUISITION COMPANY
  ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  The following discussion and analysis of our consolidated
    financial condition and results of operations should be read in
    conjunction with our consolidated financial statements and notes
    and supplementary data thereto included in Item 8.
    Financial Statements and Supplementary Data. The following
    discussion and analysis contains forward-looking statements
    including, without limitation, statements relating to our plans,
    strategies, objectives, expectations, intentions, and resources.
    Actual results could differ materially from those discussed in
    the forward-looking statements. We do not undertake to update,
    revise, or correct any of the forward-looking information unless
    required to do so under federal securities laws. Readers are
    cautioned that such forward-looking statements should be read in
    conjunction with our disclosures under the headings:
    Information Concerning Forward-Looking Statements
    and Item 1A. Risk Factors.
  Introduction
    
    Overview of Business
    2009 Highlights
    Results of Operations      
    Capital Commitments, Capital Resources, and Liquidity
    Changes in Prices
    Critical Accounting Policies and Estimates
    New Accounting Pronouncements
    Information Concerning Forward-Looking Statements  Overview
    of Business
    
    Maintaining an active development program to maximize existing
    reserves and production;
    Utilizing EOR techniques to maximize existing reserves and
    production;
    Expanding our reserves, production, and development inventory
    through a disciplined acquisition program;
    Exploring for reserves; and
    Operating in a cost effective, efficient, and safe manner.   40




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
    12-month
    2009
    Highlights
    
    Our average daily production volumes increased nine percent to
    42,929 BOE/D as compared to 39,470 BOE/D in 2008. Oil
    represented 64 percent and 70 percent of our total
    production volumes in 2009 and 2008, respectively.
    We invested $706.5 million in oil and natural gas
    activities, of which $286.9 million was invested in
    development, exploitation, and exploration activities, yielding
    112 gross (42.3 net) productive wells, and
    $419.5 million was invested in acquisitions, primarily
    related to our EXCO asset acquisition.
    In September, we issued 2,750,000 shares of our common
    stock at a price to the public of $37.40 per common share. The
    net proceeds of approximately $100.6 million were used to
    reduce outstanding borrowings under our revolving credit
    facility.
    In August, we acquired certain oil and natural gas properties
    and related assets in the Mid-Continent and East Texas from EXCO
    for approximately $357.4 million in cash (including a
    deposit of $37.5 million made in June 2009).
    In August, we sold the Rockies and Permian Basin Assets to ENP
    for approximately $179.6 million in cash.
    In June, we sold the Williston Basin Assets to ENP for
    approximately $25.2 million in cash.
    In April, we issued $225 million of our 9.5% Senior
    Subordinated Notes due 2016. We used the net proceeds of
    approximately $202.4 million to reduce outstanding
    borrowings under our revolving credit facility.
    In March, we elected to monetize certain of our 2009 oil
    derivative contracts and received net proceeds of approximately
    $190.4 million, which were used to reduce outstanding
    borrowings under our revolving credit facility.
    In January, we sold the Arkoma Basin Assets to ENP for
    approximately $46.4 million in cash. 41




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
   Results
    of Operations
  Comparison
    of 2009 to 2008
  Revenues.
  Year Ended December 31,


Increase/(Decrease)2009


2008


$


%Revenues (in thousands):Oil wellhead

$
549,391


$
900,300


$
(350,909
)Oil commodity derivative contracts






(2,857
)


2,857Total oil revenues

$
549,391


$
897,443


$
(348,052
)


(39
)%Natural gas wellhead

$
131,185


$
227,479


$
(96,294
)


(42
)%Combined wellhead

$
680,576


$
1,127,779


$
(447,203
)


(40
)%Combined commodity derivative contracts






(2,857
)


2,857Total combined oil and natural gas revenues

$
680,576


$
1,124,922


$
(444,346
)


(40
)%Marketing


4,840



10,496



(5,656
)


(54
)%Total revenues

$
685,416


$
1,135,418


$
(450,002
)


(40
)%Average realized prices:Oil wellhead ($/Bbl)

$
54.85


$
89.58


$
(34.73
)Oil commodity derivative contracts ($/Bbl)






(0.28
)


0.28Total oil revenues ($/Bbl)

$
54.85


$
89.30


$
(34.45
)


(39
)%Natural gas wellhead ($/Mcf)

$
3.87


$
8.63


$
(4.76
)


(55
)%Combined wellhead ($/BOE)

$
43.43


$
78.07


$
(34.64
)Combined commodity derivative contracts ($/BOE)






(0.20
)


0.20Total combined oil and natural gas revenues ($/BOE)

$
43.43


$
77.87


$
(34.44
)


(44
)%Total production volumes:Oil (MBbls)


10,016



10,050



(34
)


0
%Natural gas (MMcf)


33,919



26,374



7,545



29
%Combined (MBOE)


15,669



14,446



1,223



8
%Average daily production volumes:Oil (Bbl/D)


27,441



27,459



(18
)


0
%Natural gas (Mcf/D)


92,928



72,060



20,868



29
%Combined (BOE/D)


42,929



39,470



3,459



9
%Average NYMEX prices:Oil (per Bbl)

$
61.95


$
99.75


$
(37.80
)


(38
)%Natural gas (per Mcf)

$
3.99


$
9.04


$
(5.05
)


(56
)%    42




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
        Year Ended December 31,2009


2008Average oil wellhead ($/Bbl)

$
54.85


$
89.58Average NYMEX ($/Bbl)

$
61.95


$
99.75Differential to NYMEX

$
(7.10
)

$
(10.17
)Average oil wellhead to NYMEX percentage


89
%


90
%Average natural gas wellhead ($/Mcf)

$
3.87


$
8.63Average NYMEX ($/Mcf)

$
3.99


$
9.04Differential to NYMEX

$
(0.12
)

$
(0.41
)Average natural gas wellhead to NYMEX percentage


97
%


95
%        43




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  Expenses.
  Year Ended December 31,


Increase/(Decrease)2009


2008


$


%Expenses (in thousands):Production:Lease operating

$
165,062


$
175,115


$
(10,053
)Production, ad valorem, and severance taxes


69,539



110,644



(41,105
)Total production expenses


234,601



285,759



(51,158
)


(18
)%Other:Depletion, depreciation, and amortization


290,776



228,252



62,524Impairment of long-lived assets


9,979



59,526



(49,547
)Exploration


52,488



39,207



13,281General and administrative


54,024



48,421



5,603Marketing


3,994



9,570



(5,576
)Derivative fair value loss (gain)


59,597



(346,236
)


405,833Provision for doubtful accounts


7,686



1,984



5,702Other operating


25,761



12,975



12,786Total operating


738,906



339,458



399,448



118
%Interest


79,017



73,173



5,844Income tax provision (benefit)


(32,173
)


241,621



(273,794
)Total expenses

$
785,750


$
654,252


$
131,498



20
%Expenses (per BOE):Production:Lease operating

$
10.53


$
12.12


$
(1.59
)Production, ad valorem, and severance taxes


4.44



7.66



(3.22
)Total production expenses


14.97



19.78



(4.81
)


(24
)%Other:Depletion, depreciation, and amortization


18.56



15.80



2.76Impairment of long-lived assets


0.64



4.12



(3.48
)Exploration


3.35



2.71



0.64General and administrative


3.45



3.35



0.10Marketing


0.25



0.66



(0.41
)Derivative fair value loss (gain)


3.80



(23.97
)


27.77Provision for doubtful accounts


0.49



0.14



0.35Other operating


1.64



0.90



0.74Total operating


47.15



23.49



23.66



101
%Interest


5.04



5.07



(0.03
)Income tax provision (benefit)


(2.05
)


16.73



(18.78
)Total expenses

$
50.14


$
45.29


$
4.85



11
%   Production expenses.
 44




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
        Depletion, depreciation, and amortization
    (DD&A) expense.
  Impairment of long-lived assets.
   45




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  Exploration expense.
  Year Ended December 31,


Increase2009


2008


(Decrease)(In thousands)Dry holes

$
25,407


$
14,683


$
10,724Geological and seismic


1,022



2,851



(1,829
)Delay rentals


773



1,482



(709
)Impairment of unproved acreage


25,286



20,191



5,095Total

$
52,488


$
39,207


$
13,281   G&A expense.
  Marketing expense.
  Derivative fair value loss (gain).
  Year Ended December 31,


Increase/2009


2008


(Decrease)(In thousands)Ineffectiveness

$
2


$
372


$
(370
)Mark-to-market
    loss (gain)


350,365



(365,495
)


715,860Premium amortization


98,395



62,352



36,043Settlements


(389,165
)


(43,465
)


(345,700
)Total derivative fair value loss (gain)

$
59,597


$
(346,236
)

$
405,833   Provision for doubtful accounts.
  Other operating expense.
  Interest expense.
 46




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
    Year Ended December 31,


Increase/2009


2008


(Decrease)(In thousands)6.25% Senior Subordinated Notes

$
9,751


$
9,727


$
246.0% Senior Subordinated Notes


18,585



18,550



359.5% Senior Subordinated Notes


15,999







15,9997.25% Senior Subordinated Notes


11,005



10,996



9Revolving credit facilities


18,253



31,038



(12,785
)Other


5,424



2,862



2,562Total

$
79,017


$
73,173


$
5,844   Income taxes.
 47




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  Comparison
    of 2008 to 2007
  Revenues.
  Increase/Year Ended December 31,


(Decrease)2008


2007


$


%Revenues (in thousands):Oil wellhead

$
900,300


$
606,112


$
294,188Oil commodity derivative contracts


(2,857
)


(43,295
)


40,438Total oil revenues

$
897,443


$
562,817


$
334,626



59
%Natural gas wellhead

$
227,479


$
160,399


$
67,080Natural gas commodity derivative contracts






(10,292
)


10,292Total natural gas revenues

$
227,479


$
150,107


$
77,372



52
%Combined wellhead

$
1,127,779


$
766,511


$
361,268Combined commodity derivative contracts


(2,857
)


(53,587
)


50,730Total combined oil and natural gas revenues


1,124,922



712,924



411,998



58
%Marketing


10,496



42,021



(31,525
)


(75
)%Total revenues

$
1,135,418


$
754,945


$
380,473



50
%Average realized prices:Oil wellhead ($/Bbl)

$
89.58


$
63.50


$
26.08Oil commodity derivative contracts ($/Bbl)


(0.28
)


(4.54
)


4.26Total oil revenues ($/Bbl)

$
89.30


$
58.96


$
30.34



51
%Natural gas wellhead ($/Mcf)

$
8.63


$
6.69


$
1.94Natural gas commodity derivative contracts ($/Mcf)






(0.43
)


0.43Total natural gas revenues ($/Mcf)

$
8.63


$
6.26


$
2.37



38
%Combined wellhead ($/BOE)

$
78.07


$
56.62


$
21.45Combined commodity derivative contracts ($/BOE)


(0.20
)


(3.96
)


3.76Total combined oil and natural gas revenues ($/BOE)

$
77.87


$
52.66


$
25.21



48
%Total production volumes:Oil (MBbls)


10,050



9,545



505



5
%Natural gas (MMcf)


26,374



23,963



2,411



10
%Combined (MBOE)


14,446



13,539



907



7
%Average daily production volumes:Oil (Bbl/D)


27,459



26,152



1,307



5
%Natural gas (Mcf/D)


72,060



65,651



6,409



10
%Combined (BOE/D)


39,470



37,094



2,376



6
%Average NYMEX prices:Oil (per Bbl)

$
99.75


$
72.45


$
27.30



38
%Natural gas (per Mcf)

$
9.04


$
6.86


$
2.18



32
%  48




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
      mark-to-market
          Year Ended December 31,2008


2007Average oil wellhead ($/Bbl)

$
89.58


$
63.50Average NYMEX ($/Bbl)

$
99.75


$
72.45Differential to NYMEX

$
(10.17
)

$
(8.95
)Average oil wellhead to NYMEX percentage


90
%


88
%Average natural gas wellhead ($/Mcf)

$
8.63


$
6.69Average NYMEX ($/Mcf)

$
9.04


$
6.86Differential to NYMEX

$
(0.41
)

$
(0.17
)Average natural gas wellhead to NYMEX percentage


95
%


98
%    49




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
    Expenses.
  Increase/Year Ended December 31,


(Decrease)2008


2007


$


%Expenses (in thousands):Production:Lease operating

$
175,115


$
143,426


$
31,689Production, ad valorem, and severance taxes


110,644



74,585



36,059Total production expenses


285,759



218,011



67,748



31
%Other:Depletion, depreciation, and amortization


228,252



183,980



44,272Impairment of long-lived assets


59,526







59,526Exploration


39,207



27,726



11,481General and administrative


48,421



39,124



9,297Marketing


9,570



40,549



(30,979
)Derivative fair value loss (gain)


(346,236
)


112,483



(458,719
)Provision for doubtful accounts


1,984



5,816



(3,832
)Other operating


12,975



17,066



(4,091
)Total operating


339,458



644,755



(305,297
)


(47
)%Interest


73,173



88,704



(15,531
)Income tax provision


241,621



14,476



227,145Total expenses

$
654,252


$
747,935


$
(93,683
)


(13
)%Expenses (per BOE):Production:Lease operating

$
12.12


$
10.59


$
1.53Production, ad valorem, and severance taxes


7.66



5.51



2.15Total production expenses


19.78



16.10



3.68



23
%Other:Depletion, depreciation, and amortization


15.80



13.59



2.21Impairment of long-lived assets


4.12







4.12Exploration


2.71



2.05



0.66General and administrative


3.35



2.89



0.46Marketing


0.66



2.99



(2.33
)Derivative fair value loss (gain)


(23.97
)


8.31



(32.28
)Provision for doubtful accounts


0.14



0.43



(0.29
)Other operating


0.90



1.26



(0.36
)Total operating


23.49



47.62



(24.13
)


(51
)%Interest


5.07



6.55



(1.48
)Income tax provision


16.73



1.07



15.66Total expenses

$
45.29


$
55.24


$
(9.95
)


(18
)%  50




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  Production expenses.
    
    increases in prices paid to oilfield service companies and
    suppliers;
    increases in natural gas prices resulting in higher electricity
    costs and gas plant fuel costs;
    higher compensation levels for engineers and other technical
    professionals; and
    an increase of approximately $4.7 million ($0.32 per BOE)
    for retention bonuses paid in August 2008 and approximately
    $4.1 million ($0.28 per BOE) for retention bonuses paid in
    August 2009, related to our strategic alternatives process.    DD&A expense.
  Impairment of long-lived assets.
  Exploration expense.
 51




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
    Year Ended December 31,2008


2007


Increase(In thousands)Dry holes

$
14,683


$
14,673


$
10Geological and seismic


2,851



1,455



1,396Delay rentals


1,482



784



698Impairment of unproved acreage


20,191



10,814



9,377Total

$
39,207


$
27,726


$
11,481   G&A expense.
  
    a full year of ENP public entity expenses;
    higher activity levels;
    increased personnel costs due to intense competition for human
    resources within the industry; and
    an increase of approximately $2.9 million for retention
    bonuses paid in August 2008 and approximately $2.8 million
    for retention bonuses paid in August 2009, related to our
    strategic alternatives process;
    partially offset by a $3.1 million decrease in non-cash
    equity-based compensation.  Marketing expense.
  Derivative fair value loss (gain).
  Year EndedDecember 31,


Increase/2008


2007


(Decrease)(In thousands)Ineffectiveness

$
372


$



$
372Mark-to-market
    loss (gain)


(365,495
)


36,272



(401,767
)Premium amortization


62,352



41,051



21,301Settlements


(43,465
)


35,160



(78,625
)Total derivative fair value loss (gain)

$
(346,236
)

$
112,483


$
(458,719
)     Provision for doubtful accounts.
 52




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  Other operating expense.
  Interest expense.
    Year Ended December 31,


Increase/2008


2007


(Decrease)(In thousands)6.25% Senior Subordinated Notes

$
9,727


$
9,705


$
226.0% Senior Subordinated Notes


18,550



18,517



337.25% Senior Subordinated Notes


10,996



10,988



8Revolving credit facilities


31,038



46,085



(15,047
)Other


2,862



3,409



(547
)Total

$
73,173


$
88,704


$
(15,531
)   Income taxes.
  Capital
    Commitments, Capital Resources, and Liquidity
  Capital commitments.
  
    Development, exploitation, and exploration of oil and natural
    gas properties;
    Acquisitions of oil and natural gas properties;
    Funding of working capital; and
    Contractual obligations.  Development, exploitation, and exploration of oil and natural
    gas properties.
  Year Ended December 31,2009


2008


2007(In thousands)Development and exploitation

$
121,259


$
362,609


$
270,161Exploration


165,683



256,437



97,453Total

$
286,942


$
619,046


$
367,614    53




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
    Acquisitions of oil and natural gas properties and leasehold
    acreage.
  Year Ended December 31,2009


2008


2007(In thousands)Acquisitions of proved property

$
402,457


$
28,840


$
796,239Acquisitions of leasehold acreage


17,087



128,635



52,306Total

$
419,544


$
157,475


$
848,545       Funding of working capital.
     54




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  Off-balance sheet arrangements.
  Contractual obligations.
  Payments Due by PeriodContractual Obligations and Commitments

Maturity Date

Total


2010


2011 - 2012


2013 - 2014


Thereafter(In thousands)6.25% Senior Subordinated Notes(a)

4/15/2014

$
192,188


$
9,375


$
18,750


$
164,063


$
6.0% Senior Subordinated Notes(a)

7/15/2015


408,000



18,000



36,000



36,000



318,0009.5% Senior Subordinated Notes(a)

5/1/2016


363,938



21,375



42,750



42,750



257,0637.25% Senior Subordinated Notes(a)

12/1/2017


237,000



10,875



21,750



21,750



182,625Revolving credit facilities(a)

3/7/2012


432,824



10,144



422,680







Commodity derivative contracts(b)




85,029



48,804



36,225







Interest rate swaps(c)




3,669



3,320



349







Capital lease obligations




1,281



466



815







Development commitments(d)




48,026



48,026











Operating leases and commitments(e)




13,568



3,983



6,978



2,607



Asset retirement obligations(f)




192,912



1,517



3,034



3,668



184,693Total



$
1,978,435


$
175,885


$
589,331


$
270,838


$
942,381     (a)
    
    Includes principal and projected interest payments. Please read
    Note 7 of Notes to Consolidated Financial Statements
    included in Item 8. Financial Statements and
    Supplementary Data for additional information regarding
    our long-term debt.(b)
    
    Represents net liabilities for commodity derivative contracts.
    With the exception of $48.8 million of deferred premiums on
    commodity derivative contracts, the ultimate settlement amounts
    of our commodity derivative contracts are unknown because they
    are subject to continuing market risk. Please read
    Item 7A. Quantitative and Qualitative Disclosures
    about Market Risk and Note 12 of Notes to
    Consolidated Financial Statements included in Item 8.
    Financial Statements and Supplementary Data for additional
    information regarding our commodity derivative contracts.(c)
    
    Represents net liabilities for interest rate swaps, the ultimate
    settlement of which are unknown because they are subject to
    continuing market risk. Please read Item 7A.
    Quantitative and Qualitative Disclosures about Market Risk
    and Note 12 of Notes to Consolidated Financial Statements
    included in Item 1. Financial Statements for
    additional information regarding our interest rate swaps.(d)
    
    Represents authorized purchases for work in process. Also at
    December 31, 2009, we had $167.2 million of authorized
    purchases not placed to vendors (authorized AFEs), which were
    not accrued and are excluded from the above table but are
    budgeted for and are expected to be made unless circumstances
    change.(e)
    
    Includes office space and equipment obligations that have
    non-cancelable lease terms in excess of one year of
    $13.2 million and future minimum payments for other
    operating commitments of $0.4 million. Please read
    Note 4 of Notes to Consolidated Financial Statements
    included in Item 8. Financial Statements and
    Supplementary Data for additional information regarding
    our operating leases.(f)
    
    Represents the undiscounted future plugging and abandonment
    expenses on oil and natural gas properties and related
    facilities disposal at the end of field life. Please read Note 5
    of Notes to Consolidated Financial Statements included in
    Item 8. Financial Statements and Supplementary
    Data for additional information regarding our asset
    retirement obligations. 55




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
   Other contingencies and commitments. unit-of-production
      First Quarter


Second Quarter


Third Quarter


Fourth Quarterof 2009


of 2009


of 2009


of 2009Average oil wellhead to NYMEX percentage


82
%


92
%


89
%


89
%Average natural gas wellhead to NYMEX percentage


67
%


105
%


109
%


112
%     Capital
    resources
  Cash flows from operating activities.
 56




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
    Cash flows from investing activities.
    Cash flows from financing activities.
         57




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
    Liquidity
    Issuance of 9.5% Senior Subordinated Notes Due
    2016.
  Internally generated cash flows.
  Revolving credit facilities.
    Encore Acquisition Company Credit Agreement
   58




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
      CommitmentRatio of Outstanding Borrowings to Borrowing Base

Fee PercentageLess than .90 to 1


0.375
%Greater than or equal to .90 to 1


0.500
%       Applicable Margin for


Applicable Margin forRatio of Outstanding Borrowings to Borrowing Base

Eurodollar Loans


Base Rate LoansLess than .50 to 1


1.750
%


0.500
%Greater than or equal to .50 to 1 but less than .75 to 1


2.000
%


0.750
%Greater than or equal to .75 to 1 but less than .90 to 1


2.250
%


1.000
%Greater than or equal to .90 to 1


2.500
%


1.250
%         
    a prohibition against incurring debt, subject to permitted
    exceptions;
    a prohibition against paying dividends or making distributions,
    purchasing or redeeming capital stock, or prepaying
    indebtedness, subject to permitted exceptions; 59




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
   
    a restriction on creating liens on our and our restricted
    subsidiaries assets, subject to permitted exceptions;
    restrictions on merging and selling assets outside the ordinary
    course of business;
    restrictions on use of proceeds, investments, transactions with
    affiliates, or change of principal business;
    a provision limiting oil and natural gas hedging transactions
    (other than puts) to a volume not exceeding 75 percent of
    anticipated production from proved producing reserves;
    a requirement that we maintain a ratio of consolidated current
    assets to consolidated current liabilities of not less than 1.0
    to 1.0; and
    a requirement that we maintain a ratio of consolidated EBITDA to
    the sum of consolidated net interest expense plus letter of
    credit fees of not less than 2.5 to 1.0.      Encore Energy Partners Operating LLC Credit Agreement
           60




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
    Applicable Margin for


Applicable Margin forRatio of Outstanding Borrowings to Borrowing Base

Eurodollar Loans


Base Rate LoansLess than .50 to 1


2.250
%


1.250
%Greater than or equal to .50 to 1 but less than .75 to 1


2.500
%


1.500
%Greater than or equal to .75 to 1 but less than .90 to 1


2.750
%


1.750
%Greater than or equal to .90 to 1


3.000
%


2.000
%         
    a prohibition against incurring debt, subject to permitted
    exceptions;
    a prohibition against purchasing or redeeming capital stock, or
    prepaying indebtedness, subject to permitted exceptions;
    a restriction on creating liens on the assets of ENP, OLLC, and
    OLLCs restricted subsidiaries, subject to permitted
    exceptions;
    restrictions on merging and selling assets outside the ordinary
    course of business;
    restrictions on use of proceeds, investments, transactions with
    affiliates, or change of principal business;
    a provision limiting oil and natural gas hedging transactions
    (other than puts) to a volume not exceeding 75 percent of
    anticipated production from proved producing reserves;
    a requirement that ENP and OLLC maintain a ratio of consolidated
    current assets to consolidated current liabilities of not less
    than 1.0 to 1.0 (the ENP Current Ratio);
    a requirement that ENP and OLLC maintain a ratio of consolidated
    EBITDA to the sum of consolidated net interest expense plus
    letter of credit fees of not less than 2.5 to 1.0 (the ENP
    Interest Coverage Ratio); and
    a requirement that ENP and OLLC maintain a ratio of consolidated
    funded debt to consolidated adjusted EBITDA of not more than 3.5
    to 1.0 (the ENP Leverage Ratio).   61




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
    Actual Ratio as ofFinancial Covenant

Required Ratio

December 31, 2009ENP Current Ratio

Minimum 1.0 to 1.0

5.1 to 1.0ENP Interest Coverage Ratio

Minimum 2.5 to 1.0

10.7 to 1.0ENP Leverage Ratio

Maximum 3.5 to 1.0

2.0 to 1.0     ENP current assets

$
48,248Availability under the OLLC Credit Agreement


120,000ENP consolidated current assets

$
168,248Divided by: ENP consolidated current liabilities

$
32,690ENP Current Ratio


5.1     ENP Consolidated EBITDA(a)

$
116,732Divided by: ENP consolidated net interest expense and letter of
    credit fees

$
10,928ENP Interest Coverage Ratio


10.7     (a)
    
    ENP Consolidated EBITDA is defined in the OLLC Credit Agreement
    and generally means earnings before interest, income taxes,
    depletion, depreciation, and amortization, and exploration
    expense. ENP Consolidated EBITDA is a non-GAAP financial
    measure, which is reconciled to its most directly comparable
    GAAP measure below.    ENP consolidated funded debt

$
255,000Divided by: ENP Consolidated Adjusted EBITDA(a)

$
127,719ENP Leverage Ratio


2.0     (a)
    
    ENP Consolidated Adjusted EBITDA is defined in the OLLC Credit
    Agreement and generally means earnings before interest, income
    taxes, depletion, depreciation, and amortization, and
    exploration expense, after giving pro forma effect to one or
    more acquisitions or dispositions in excess of $20 million
    in the aggregate. ENP Consolidated Adjusted EBITDA is a non-GAAP
    financial measure, which is reconciled to its most directly
    comparable GAAP measure below. 62




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
     ENP consolidated net income

$
(40,507
)ENP unrealized non-cash hedge gain


94,441ENP consolidated net interest expense


10,928ENP income and franchise taxes


14ENP depletion, depreciation, amortization, and exploration
    expense


50,040ENP non-cash unit-based compensation


565ENP other non-cash


1,251ENP Consolidated EBITDA


116,732Pro forma effect of acquisitions


10,987ENP Consolidated Adjusted EBITDA

$
127,719       Indentures governing our senior subordinated
    notes.
  
    incur additional indebtedness;
    pay dividends on our capital stock or redeem, repurchase, or
    retire our capital stock or subordinated indebtedness;
    make investments;
    incur liens;
    create any consensual limitation on the ability of our
    restricted subsidiaries to pay dividends, make loans, or
    transfer property to us;
    engage in transactions with our affiliates;
    sell assets, including capital stock of our subsidiaries;
    consolidate, merge, or transfer assets;
    a requirement that we maintain a current ratio (as defined in
    the indentures) of not less than 1.0 to 1.0; and
    a requirement that we maintain a ratio of consolidated EBITDA
    (as defined in the indentures) to consolidated interest expense
    of not less than 2.5 to 1.0. 63




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
     Capitalization.
  Changes
    in Prices
    Year Ended December 31,2009


2008


2007Average realized prices:Oil ($/Bbl)

$
54.85


$
89.30


$
58.96Natural gas ($/Mcf)


3.87



8.63



6.26Combined ($/BOE)


43.43



77.87



52.66Average wellhead prices:Oil ($/Bbl)

$
54.85


$
89.58


$
63.50Natural gas ($/Mcf)


3.87



8.63



6.69Combined ($/BOE)


43.43



78.07



56.62     Critical
    Accounting Policies and Estimates
   64




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  Oil
    and Natural Gas Properties
  Successful efforts method. Financial Accounting and Reporting by Oil and Gas
    Producing Companies
        unit-of-production
    360-10, 855-10-60-1 Accounting for the
    Impairment or Disposal of Long-Lived Assets
 65




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  and/or
  property-by-property
  Oil and natural gas reserves. well-by-well
  
    quality and quantity of available data;
    interpretation of that data;
    accuracy of various mandated economic assumptions; and
    judgment of the independent reserve engineer.    Asset retirement obligations. 410-20, 450-20, 835-20, 360-10-35, 840-10, 980-410 Accounting for Asset
    Retirement Obligations
   66




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
    Goodwill
    and Other Intangible Assets
  730-10-60-3, 323-10-35-13, 205-20-60-4, 280-10-60-2 Goodwill and Other
    Intangible Assets
    360-10, 855-10-60-1,
    Net
    Profits Interests
   67




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  Oil
    and Natural Gas Revenue Recognition
    Income
    Taxes
  and/or
  Derivatives
  over-the-counter
  Accounting for Derivative
    Instruments and Hedging Activities
  mark-to-market mark-to-market
   68




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
    New
    Accounting Pronouncements
  FASB
    Launches Accounting Standards Codification
  105-10 The FASB Accounting
    Standards Codification and the Hierarchy of Generally Accepted
    Accounting Principles 105-10 105-10 105-10
      ASC
    820-10
    (formerly FSP
    No. FAS 157-2,
    Effective Date of FASB Statement
    No. 157)
  820-10, 820-10 820-10 820-10 820-10, 820-10
  ASC
    805 (formerly SFAS No. 141 (revised 2007),
    Business Combinations)
  805-20 Accounting
    for Assets Acquired and Liabilities Assumed in a Business
    Combination That Arises from Contingencies 805-20 805-20
 69




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  ASC
    810-10-65-1
    (formerly SFAS No. 160, Noncontrolling Interests
    in Consolidated Financial Statements  an amendment to
    ARB No. 51)
  810-10-65-1, 810-10-65-1 810-10-65-1 810-10-65-1 810-10-65-1 810-10-65-1
  ASC
    815-10
    (formerly SFAS No. 161, Disclosures about
    Derivative Instruments and Hedging
    Activities  an amendment of FASB Statement
    No. 133)
  815-10, 815-10 815-10
  ASC
    260-10
    (formerly FSP No. EITF
    03-6-1,
    Determining Whether Instruments Granted in
    Share-Based
    Payment Transactions Are Participating
    Securities)
  260-10, 260-10 260-10 260-10 260-10
  SEC
    Release
    No. 33-8995,
    Modernization of Oil and Gas Reporting
    (Release
    33-8995)
  33-8995, 33-8995 Regulation S-K 33-8995 33-8995
 70




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  12-month 33-8995
  ASC
    855-10
    (formerly SFAS No. 165, Subsequent
    Events)
  855-10 855-10 855-10 855-10
  ASU
    No. 2009-05,
    Fair Value Measurement and Disclosure: Measuring
    Liabilities at Fair Value (ASU
    2009-05)
  2009-05 2009-05 2009-05 2009-05
  ASU
    No. 2010-03,
    Oil and Gas Reserve Estimation and Disclosure
    (ASU
    2010-03)
  2010-03 Modernization of the Oil and Gas
    Reporting 2010-03
  ASU
    No. 2010-06,
    Improving Disclosures about Fair Value Measurements
    (ASU
    2010-06)
  2010-06 2010-06 2010-06
  Information
    Concerning Forward-Looking Statements
   71




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
    
    the occurrence of any event, change, or other circumstance that
    could affect the consummation of the Merger or give rise to the
    termination of the Merger Agreement in connection with the
    Merger;
    the inability to complete the Merger due to the failure to
    satisfy any conditions required to consummate the Merger;
    items of income and expense (including, without limitation, LOE,
    production taxes, DD&A, G&A, and effective income tax
    rates);
    expected capital expenditures and the focus of our capital
    program;
    areas of future growth;
    our development and exploitation programs;
    future secondary development and tertiary recovery potential;
    anticipated prices for oil and natural gas and expectations
    regarding differentials between wellhead prices and benchmark
    prices (including, without limitation, the effects of the
    worldwide economic recession);
    projected results of operations;
    timing and amount of future production of oil and natural gas;
    availability of pipeline capacity;
    expected commodity derivative positions and payments related
    thereto (including the ability of counterparties to fulfill
    obligations);
    expectations regarding working capital, cash flow, and liquidity;
    projected borrowings under our revolving credit facility (and
    the ability of lenders to fund their commitments); and
    the marketing of our oil and natural gas production.      ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK   72




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
    Derivative policy.
  Counterparties.
  Fair Market Value of


Fair Market Value ofOil Derivative


Natural Gas DerivativeCounterparty

Contracts Committed


Contracts Committed(In thousands)BNP Paribas

$
22,570


$
7,496Calyon


(a
)


8,550JP Morgan


10,272



(a
)Royal Bank of Canada


14,059



(a
)Wachovia


8,302



3,844     (a)
    
    Less than 10 percent.    Commodity price sensitivity.
   73




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
    and/or
    Oil
    Derivative Contracts
  Asset/Average


Weighted


Average


Weighted


Average


Weighted


(Liability)Daily


Average


Daily


Average


Daily


Average


FairFloor


Floor


Cap


Cap


Swap


Swap


MarketPeriod


Volume


Price


Volume


Price


Volume


Price


Value(Bbls)


(per Bbl)


(Bbls)


(per Bbl)


(Bbls)


(per Bbl)


(In thousands)2010
































$
(30,760
)880



$
80.00




2,940



$
90.57








$
5,500




73.47




3,000




74.13




3,885




77.798,385




62.83




500




65.60




1,750




64.081,000




56.00














1,000




59.702011

































17,7204,880




80.00




2,940




94.44




325




80.002,500




70.00














1,060




78.424,385




65.00














250




69.652012

































(5,120
)750




70.00




500




82.05




835




81.192,135




65.00




250




79.25




1,300




76.54$
(18,160
)  74




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  Natural
    Gas Derivative Contracts
  Average


Weighted


Average


Weighted


Average


Weighted


AssetDaily


Average


Daily


Average


Daily


Average


FairFloor


Floor


Cap


Cap


Swap


Swap


MarketPeriod


Volume


Price


Volume


Price


Volume


Price


Value(Mcf)


(per Mcf)


(Mcf)


(per Mcf)


(Mcf)


(per Mcf)


(In thousands)Jan.  June 2010
































$
5,9493,800



$
8.20




3,800



$
9.58




25,452



$
6.464,698




7.26














20,550




5.23July  Dec. 2010

































6,6443,800




8.20




3,800




9.58









4,698




7.26




10,000




6.25




25,452




6.4610,000




5.13














550




5.862011

































4,6773,398




6.31














27,952




6.48



















550




5.862012

































1,755898




6.76














25,452




6.47



















550




5.86$
19,025   Interest rate sensitivity.
        Notional

Fixed

FloatingTerm

Amount

Rate

Rate(In thousands)Jan. 2010  Jan. 2011

$
50,000



3.1610
%


1-month LIBORJan. 2010  Jan. 2011


25,000



2.9650
%


1-month LIBORJan. 2010  Jan. 2011


25,000



2.9613
%


1-month LIBORJan. 2010  Mar. 2012


50,000



2.4200
%


1-month LIBOR  75




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  Index to
    Consolidated Financial Statements
  PageReport of Independent Registered Public
    Accounting Firm


77Consolidated Balance Sheets as of
    December 31, 2009 and 2008


78Consolidated Statements of Operations for the
    Years Ended December 31, 2009, 2008, and 2007


79Consolidated Statements of Equity and
    Comprehensive Income (Loss) for the Years Ended
    December 31, 2009, 2008, and 2007


80Consolidated Statements of Cash Flows for the
    Years Ended December 31, 2009, 2008, and 2007


81Notes to Consolidated Financial Statements


82Supplementary Information


139  76




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM           Noncontrolling Interests in Consolidated
    Financial Statements  an amendment to ARB
    No. 51 Consolidation No. EITF 03-6-1, Determining Whether Instruments Granted in Share-Based
    Payment Transactions Are Participating Securities Earnings Per Share No. 2010-03 ,
    Oil and Gas Reserve Estimation and Disclosures,
  Internal Control 
    Integrated Framework
  Ernst &
    Young LLP
     77




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  CONSOLIDATED
    BALANCE SHEETS
  December 31,2009


2008(In thousands, exceptshare and par valueamounts)ASSETSCurrent assets:Cash and cash equivalents

$
13,958


$
2,039Accounts receivable, net of allowance for doubtful accounts of
    $434 and $381, respectively


114,872



117,995Current portion of long-term receivables


10,581



11,070Inventory


26,674



24,798Derivatives


25,825



349,344Income taxes


1,712



29,445Other


3,897



6,239Total current assets


197,519



540,930Properties and equipment, at cost  successful efforts
    method:Proved properties, including wells and related equipment


4,204,622



3,538,459Unproved properties


95,601



124,339Accumulated depletion, depreciation, and amortization


(1,058,267
)


(771,564
)3,241,956



2,891,234Other property and equipment


32,649



25,192Accumulated depreciation


(17,187
)


(12,753
)15,462



12,439Goodwill


60,606



60,606Derivatives


35,206



38,497Long-term receivables, net of allowance for doubtful accounts of
    $13,645 and $7,643, respectively


55,358



60,915Other


57,854



28,574Total assets

$
3,663,961


$
3,633,195LIABILITIES AND EQUITYCurrent liabilities:Accounts payable

$
7,138


$
10,017Accrued liabilities:Lease operating


15,862



19,108Development capital


47,892



79,435Interest


15,836



11,808Production, ad valorem, and severance taxes


29,735



25,133Compensation


12,991



16,216Derivatives


69,958



63,476Oil and natural gas revenues payable


18,415



10,821Deferred taxes


18,689



105,768Other


23,857



10,470Total current liabilities


260,373



352,252Derivatives


42,698



8,922Future abandonment cost, net of current portion


52,367



48,058Deferred taxes


453,110



416,915Long-term debt


1,214,097



1,319,811Other


10,483



3,989Total liabilities


2,033,128



2,149,947Commitments and contingencies (see Note 4)Equity:Preferred stock, $.01 par value, 5,000,000 shares
    authorized, none issued and outstanding






Common stock, $.01 par value, 144,000,000 shares
    authorized, 54,621,701 and 51,551,937 issued and outstanding,
    respectively


546



516Additional paid-in capital


669,717



525,763Treasury stock, at cost, of none and 4,753 shares,
    respectively






(101
)Retained earnings


706,694



789,698Accumulated other comprehensive loss


(1,038
)


(1,748
)Total EAC stockholders equity


1,375,919



1,314,128Noncontrolling interest


254,914



169,120Total equity


1,630,833



1,483,248Total liabilities and equity

$
3,663,961


$
3,633,195    78




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  Year Ended December 31,2009


2008


2007(In thousands, except per share amounts)Revenues:Oil

$
549,391


$
897,443


$
562,817Natural gas


131,185



227,479



150,107Marketing


4,840



10,496



42,021Total revenues


685,416



1,135,418



754,945Expenses:Production:Lease operating


165,062



175,115



143,426Production, ad valorem, and severance taxes


69,539



110,644



74,585Depletion, depreciation, and amortization


290,776



228,252



183,980Impairment of long-lived assets


9,979



59,526



Exploration


52,488



39,207



27,726General and administrative


54,024



48,421



39,124Marketing


3,994



9,570



40,549Derivative fair value loss (gain)


59,597



(346,236
)


112,483Provision for doubtful accounts


7,686



1,984



5,816Other operating


25,761



12,975



17,066Total expenses


738,906



339,458



644,755Operating income (loss)


(53,490
)


795,960



110,190Other income (expenses):Interest


(79,017
)


(73,173
)


(88,704
)Other


2,447



3,898



2,667Total other expenses


(76,570
)


(69,275
)


(86,037
)Income (loss) before income taxes


(130,060
)


726,685



24,153Income tax benefit (provision)


32,173



(241,621
)


(14,476
)Consolidated net income (loss)


(97,887
)


485,064



9,677Less: net loss (income) attributable to noncontrolling interest


16,752



(54,252
)


7,478Net income (loss) attributable to EAC stockholders

$
(81,135
)

$
430,812


$
17,155Net income (loss) per common share:Basic

$
(1.54
)

$
8.10


$
0.32Diluted

$
(1.54
)

$
8.01


$
0.31Weighted average common shares outstanding:Basic


52,634



52,270



53,170Diluted


52,634



52,866



53,629    79




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  CONSOLIDATED
    STATEMENTS OF EQUITY AND COMPREHENSIVE INCOME
    (LOSS)
  EAC StockholdersIssued

















Accumulated


TotalShares of





Additional


Shares of








Other


EACCommon


Common


Paid-in


Treasury


Treasury


Retained


Comprehensive


Stockholders


Noncontrolling


TotalStock


Stock


Capital


Stock


Stock


Earnings


Loss


Equity


Interest


Equity(In thousands)Balance at December 31, 2006


53,047


$
531


$
457,201



(18
)

$
(457
)

$
394,917


$
(35,327
)

$
816,865


$



$
816,865Exercise of stock options and vesting of restricted stock


313



3



1,587



















1,590







1,590Purchase of treasury stock














(39
)


(1,136
)










(1,136
)






(1,136
)Cancellation of treasury stock


(39
)






(338
)


39



1,003



(665
)














Non-cash equity-based compensation










14,632



















14,632



2,627



17,259ENP cash distributions to noncontrolling interest


































(538
)


(538
)ENP cash distributions to holders of management incentive units






















(30
)






(30
)






(30
)Net proceeds from ENP issuance of common units










(12,088
)


















(12,088
)


205,549



193,461Adjustment to reflect gain on ENP issuance of common units










77,626



















77,626



(77,626
)


Components of comprehensive income:Consolidated net income






















17,155







17,155



(7,478
)


9,677Amortization of deferred hedge losses, net of tax of $20,047


























33,541



33,541







33,541Total comprehensive income






























50,696



(7,478
)


43,218Balance at December 31, 2007


53,321



534



538,620



(18
)


(590
)


411,377



(1,786
)


948,155



122,534



1,070,689Exercise of stock options and vesting of restricted stock


300



2



2,620



















2,622







2,622Repurchase and retirement of common stock


(2,018
)


(20
)


(19,279
)










(47,871
)






(67,170
)






(67,170
)Purchase of treasury stock














(33
)


(1,055
)










(1,055
)






(1,055
)Cancellation of treasury stock


(46
)






(465
)


46



1,544



(1,079
)














Non-cash equity-based compensation










14,505



















14,505



1,697



16,202ENP cash distributions to noncontrolling interest


































(24,004
)


(24,004
)ENP cash distributions to holders of management incentive units






















(3,541
)






(3,541
)






(3,541
)Net proceeds from ENP issuance of common units


































5,748



5,748Adjustment to reflect gain on ENP issuance of common units










3,458



















3,458



(3,458
)


Economic uniformity adjustment related to conversion of
    management incentive units










(13,920
)


















(13,920
)


13,920



Other










224



















224







224Components of comprehensive income:Consolidated net income






















430,812







430,812



54,252



485,064Change in deferred hedge loss on interest rate swaps, net of tax
    of $957


























(1,748
)


(1,748
)


(1,569
)


(3,317
)Amortization of deferred loss on commodity derivative contracts,
    net of tax of $1,071


























1,786



1,786







1,786Total comprehensive income






























430,850



52,683



483,533Balance at December 31, 2008


51,557



516



525,763



(5
)


(101
)


789,698



(1,748
)


1,314,128



169,120



1,483,248Exercise of stock options and vesting of restricted stock


431



3



29



















32







32Net proceeds from issuance of EAC common stock


2,750



27



100,581



















100,608







100,608Purchase of treasury stock














(111
)


(2,961
)










(2,961
)






(2,961
)Cancellation of treasury stock


(116
)






(1,193
)


116



3,062



(1,869
)














Non-cash equity-based compensation










14,843



















14,843



172



15,015ENP cash distributions to noncontrolling interest


































(37,723
)


(37,723
)Net proceeds from issuance of ENP common units


































169,806



169,806Adjustment to reflect gain on ENP issuance of common units










29,577



















29,577



(29,577
)


Economic uniformity adjustment related to conversion of
    management incentive units










(78
)


















(78
)


78



Other










195



















195







195Components of comprehensive loss:Consolidated net loss






















(81,135
)






(81,135
)


(16,752
)


(97,887
)Change in deferred hedge loss on interest rate swaps, net of tax
    of $344


























710



710



(210
)


500Total comprehensive loss






























(80,425
)


(16,962
)


(97,387
)Balance at December 31, 2009


54,622


$
546


$
669,717






$



$
706,694


$
(1,038
)

$
1,375,919


$
254,914


$
1,630,833    80




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Year Ended December 31,2009


2008


2007(In thousands)Cash flows from operating activities:Consolidated net income (loss)

$
(97,887
)

$
485,064


$
9,677Adjustments to reconcile net income (loss) to net cash provided
    by operating activities:Depletion, depreciation, and amortization


290,776



228,252



183,980Impairment of long-lived assets


9,979



59,526



Non-cash exploration expense


50,693



34,874



25,487Deferred taxes


(51,280
)


232,614



12,588Non-cash equity-based compensation expense


12,731



14,115



15,997Non-cash derivative loss (gain)


181,409



(299,914
)


130,910Inventory valuation


6,473







Loss (gain) on disposition of assets


(2,145
)


(3,623
)


7,409Provision for doubtful accounts


7,686



1,984



5,816Other


10,118



6,479



10,182Changes in operating assets and liabilities, net of effects from
    acquisitions:Accounts receivable


25,022



(8,488
)


(48,647
)Current derivatives


256,261



(13,681
)


(17,430
)Other current assets


19,621



(35,495
)


3,108Long-term derivatives






(8,601
)


(35,750
)Other assets


(396
)


(2,174
)


(1,214
)Accounts payable


2,283



(11,468
)


4,461Other current liabilities


25,907



(14,351
)


14,788Other noncurrent liabilities


(1,574
)


(1,876
)


(1,655
)Net cash provided by operating activities


745,677



663,237



319,707Cash flows from investing activities:Proceeds from disposition of assets


6,032



4,235



287,928Purchases of other property and equipment


(7,627
)


(4,208
)


(3,519
)Acquisition of oil and natural gas properties


(432,957
)


(142,559
)


(848,545
)Development of oil and natural gas properties


(342,298
)


(560,997
)


(335,897
)Net collections from (advances to) working interest partners


7,420



(24,817
)


(29,523
)Net cash used in investing activities


(769,430
)


(728,346
)


(929,556
)Cash flows from financing activities:Repurchase and retirement of common stock






(67,170
)


Exercise of stock options and vesting of restricted stock, net
    of treasury stock purchases


(2,929
)


1,567



454Proceeds from long-term debt, net of issuance costs


632,166



1,370,339



1,479,259Payments on long-term debt


(750,000
)


(1,172,500
)


(1,034,428
)Proceeds from issuance of EAC common stock, net of offering costs


100,608







Proceeds from issuance of ENP common units, net of offering costs


170,088







193,461ENP cash distributions to noncontrolling interest and holders of
    management incentive units


(37,723
)


(27,545
)


(568
)Payments of deferred commodity derivative contract premiums


(71,376
)


(39,184
)


(26,195
)Change in cash overdrafts


(5,162
)


(63
)


(1,193
)Net cash provided by financing activities


35,672



65,444



610,790Increase in cash and cash equivalents


11,919



335



941Cash and cash equivalents, beginning of period


2,039



1,704



763Cash and cash equivalents, end of period

$
13,958


$
2,039


$
1,704    81




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
 NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  Note 1.
    Description
    of Business    
    the Cedar Creek Anticline (CCA) in the Williston
    Basin in Montana and North Dakota;
    the Permian Basin in West Texas and southeastern New Mexico;
    the Rockies, which includes non-CCA assets in the Williston, Big
    Horn, and Powder River Basins in Wyoming, Montana, and North
    Dakota, and the Paradox Basin in southeastern Utah; and
    the Mid-Continent area, which includes the Arkoma and Anadarko
    Basins in Arkansas and Oklahoma, the North Louisiana Salt Basin,
    and the East Texas Basin.  Merger
    with Denbury
    Note 2.
    Summary
    of Significant Accounting Policies  Principles
    of Consolidation
    Noncontrolling
    Interest
  810-20 No. 04-5, Determining Whether a General Partner, or the General
    Partners as a Group, Controls a Limited Partnership or Similar
    Entity When the Limited Partners Have Certain Rights
   82




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Year Ended December 31,2009


2008


2007(In thousands)Net income (loss) attributable to EAC stockholders

$
(81,135
)

$
430,812


$
17,155Transfer from (to) noncontrolling interest:Increase in EACs paid-in capital for ENPs issuance
    of 10,148,400 common units in public offering










77,626Increase in EACs paid-in capital for ENPs issuance
    of 283,700 common units in connection with acquisition of net
    profits interest in certain Crockett County properties






3,458



Increase in EACs paid-in capital for ENPs issuance
    of 2,760,000 common units in public offering


9,312







Increase in EACs paid-in capital for ENPs issuance
    of 9,430,000 common units in public offering


20,265







Net transfer from noncontrolling interest


29,577



3,458



77,626Change from net income (loss) attributable to EAC stockholders
    and transfers from (to) noncontrolling interest

$
(51,558
)

$
434,270


$
94,781   Use of
    Estimates
      Cash
    and Cash Equivalents
  bank-by-bank
 83




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2009


2008


2007(In thousands)Cash paid during the period for:Interest

$
66,952


$
67,519


$
82,649Income taxes


9,075



33,110



260Non-cash investing and financing activities:Deferred premiums on commodity derivative contracts


50,972



53,387



20,341ENPs issuance of common units in connection with
    acquisition of net profits interest in certain Crockett County
    properties






5,748



   Accounts
    Receivable
      Year Ended December 31,2009


2008(In thousands)Allowance for doubtful accounts at January 1

$
8,024


$
6,045Bad debt expense


7,686



1,984Write off


(1,631
)


(5
)Allowance for doubtful accounts at December 31

$
14,079


$
8,024    84




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Inventory
    December 31,2009


2008(In thousands)Materials and supplies

$
17,931


$
15,933Oil in pipelines


8,743



8,865Total inventory

$
26,674


$
24,798     Properties
    and Equipment
  Oil and Natural Gas Properties. Financial Accounting and Reporting by Oil and Gas
    Producing Companies
    unit-of-production
 85




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        360-10, 855-10-60-1 Accounting for the
    Impairment or Disposal of Long-Lived Assets and/or
  property-by-property
    December 31,2009


2008(In thousands)Proved leasehold costs

$
1,782,042


$
1,421,859Wells and related equipment  Completed


2,408,662



1,943,275Wells and related equipment  In process


13,918



173,325Total proved properties

$
4,204,622


$
3,538,459   Other Property and Equipment.
 86




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Goodwill
    and Other Intangible Assets
  730-10-60-3, 323-10-35-13, 205-20-60-4, 280-10-60-2 Goodwill and Other
    Intangible Assets
    410-20, 450-20, 835-20, 360-10-35, 840-10, 980-410,
    2 2 2 2
  Asset
    Retirement Obligations
  410-20, 450-20, 835-20, 360-10-35, 840-10, 980-410 Accounting for Asset
    Retirement Obligations
 87




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Equity-Based
    Compensation
  505-50, 260-10-60-1A Share-Based Payment 505-50, 260-10-60-1A.
  505-50, 260-10-60-1A
  Segment
    Reporting
    Major
    Customers/Concentration of Credit Risk
    Percentage of Total Sales of Production for the Year Ended
    December 31,2009


2008


2007Consolidated EACEight-Eight Oil


18
%


14
%


14
%Tesoro Refining & Marketing Co


(a
)


12
%


(a
)ENPMarathon Oil Corporation


42
%


19
%


24
%ConocoPhillips


(a
)


17
%


10
%Tesoro Refining & Marketing Co


(a
)


15
%


17
%EAC StandaloneEight-Eight Oil


22
%


23
%


29
%Tesoro Refining & Marketing Co


(a
)


13
%


(a
)     (a)
    
    Less than 10 percent for the period indicated. 88




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Income
    Taxes
    805-740, 835-10 Accounting
    for Uncertainty in Income Taxes  an Interpretation of
    FASB Statement No. 109 805-740, 835-10
    
    a review of documentation of tax positions taken on previous
    returns including an assessment of whether EAC followed industry
    practice or the applicable requirements under the tax code;
    a review of open tax returns (on a jurisdiction by jurisdiction
    basis) as well as supporting documentation used to support those
    tax returns;
    a review of the results of past tax examinations;
    a review of whether tax returns have been filed in all
    appropriate jurisdictions;
    a review of existing permanent and temporary
    differences; and
    consideration of any tax planning strategies that may have been
    used to support realization of deferred tax assets.  805-740, 835-10.
  Oil
    and Natural Gas Revenue Recognition
   89




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Marketing
    Revenues and Expenses
    845-10 No. 04-13, Accounting for Purchases and Sales of Inventory with
    the Same Counterparty
  Shipping
    Costs
    Derivatives
  over-the-counter
  Accounting for Derivative
    Instruments and Hedging Activities
  mark-to-market
 90




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  mark-to-market
    Earnings
    Per Share
  260-10 No. 03-6, Participating Securities and the Two-Class Method
    under FASB Statement No. 128 260-10,
  Comprehensive
    Income (Loss)
    FASB
    Launches Accounting Standards Codification
  105-10 The FASB Accounting
    Standards Codification and the Hierarchy of Generally Accepted
    Accounting Principles 105-10 105-10 105-10
      New
    Accounting Pronouncements
  ASC
    820-10
    (formerly FSP
    No. FAS 157-2,
    Effective Date of FASB Statement
    No. 157)
  820-10, 820-10
 91




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  820-10 820-10 820-10, 820-10
  ASC 805
    (formerly SFAS No. 141 (revised 2007), Business
    Combinations)
  805-20 Accounting
    for Assets Acquired and Liabilities Assumed in a Business
    Combination That Arises from Contingencies 805-20 805-20
  ASC
    810-10-65-1
    (formerly SFAS No. 160, Noncontrolling Interests
    in Consolidated Financial Statements  an amendment to
    ARB No. 51)
  810-10-65-1, 810-10-65-1 810-10-65-1 810-10-65-1 810-10-65-1 810-10-65-1
  ASC
    815-10
    (formerly SFAS No. 161, Disclosures about
    Derivative Instruments and Hedging Activities  an
    amendment of FASB Statement No. 133)
  815-10, 815-10
 92




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  815-10
  ASC
    260-10
    (formerly FSP No. EITF
    03-6-1,
    Determining Whether Instruments Granted in Share-Based
    Payment Transactions Are Participating
    Securities)
  260-10, 260-10 260-10 260-10 260-10
  SEC
    Release
    No. 33-8995,
    Modernization of Oil and Gas Reporting
    (Release
    33-8995)
  33-8995, 33-8995 Regulation S-K 33-8995 33-8995 12-month 33-8995
  ASC
    855-10
    (formerly SFAS No. 165, Subsequent
    Events)
  855-10 855-10 855-10 855-10
 93




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  ASU
    No. 2009-05,
    Fair Value Measurement and Disclosure: Measuring
    Liabilities at Fair Value (ASU
    2009-05)
  2009-05 2009-05 2009-05 2009-05
  ASU
    No. 2010-03,
    Oil and Gas Reserve Estimation and Disclosure
    (ASU
    2010-03)
  2010-03 Modernization of the Oil and Gas
    Reporting 2010-03
  ASU
    No. 2010-06,
    Improving Disclosures about Fair Value Measurements
    (ASU
    2010-06)
  2010-06 2010-06 2010-06
  Note 3.
    Acquisitions
    and Dispositions  Acquisitions
  EXCO.
 94




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Proved properties, including wells and related equipment

$
367,341Accounts receivable


6,191Other property and equipment


435Total assets acquired


373,967Current liabilities


4,791Future abandonment cost


11,764Total liabilities assumed


16,555Fair value of net assets acquired

$
357,412   Vinegarone.
  Anadarko.
    Dispositions
  Mid-Continent.
 95




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Pro
    Formas
    Year Ended December 31,2009


2008


2007(In thousands, except per share amounts)Pro forma total revenues

$
727,343


$
1,294,513


$
854,388Pro forma net income (loss) attributable to EAC stockholders

$
(77,741
)

$
483,231


$
48,004Pro forma net income (loss) per common share:Basic

$
(1.48
)

$
9.14


$
0.90Diluted

$
(1.48
)

$
9.04


$
0.89   Note 4.
    Commitments
    and Contingencies  Litigation
      Sanjay Israni, Individually and On Behalf of All
    Others Similarly Situated vs. Encore Acquisition Company et al.
  Teamsters Allied Benefit Funds, Individually and On
    Behalf of All Others Similarly Situated vs. Encore Acquisition
    Company et al.
  Thomas W. Scott, Jr., individually and on
    behalf of all others similarly situated v. Encore
    Acquisition Company et al.
  Teamsters Scott Teamsters Scott Teamsters
 96




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Leases
    2010

$
3,6352011


3,5972012


3,3582013


2,6072014


Thereafter


$
13,197     Note 5.
    Asset
    Retirement Obligations    Year Ended December 31,2009


2008(In thousands)Future abandonment liability at January 1

$
49,569


$
28,079Wells drilled


300



498Acquisition of properties


3,666



111Disposition of properties


(220
)


Accretion of discount


2,400



1,361Plugging and abandonment costs incurred


(1,576
)


(1,756
)Revision of previous estimates


(255
)


21,276Future abandonment liability at December 31

$
53,884


$
49,569      97




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 6.
    Capitalization
    of Exploratory Well Costs    Year Ended December 31,2009


2008


2007(In thousands)Beginning balance at January 1

$
28,757


$
19,479


$
13,048Additions to capitalized exploratory well costspending the determination of proved reserves


8,241



28,757



19,479Reclassification to proved property and equipmentbased on the determination of proved reserves


(15,054
)


(19,229
)


(9,390
)Previously capitalized exploratory well costs charged to expense


(13,703
)


(250
)


(3,658
)Ending balance at December 31

$
8,241


$
28,757


$
19,479     Note 7.
    Long-Term
    Debt    Maturity


December 31,Date


2009


2008(In thousands)Revolving credit facilities


3/7/2012


$
410,000


$
725,0006.25% Senior Subordinated Notes


4/15/2014



150,000



150,0006.0% Senior Subordinated Notes, net of unamortized discount
    of $3,449 and $3,960, respectively


7/15/2015



296,551



296,0409.5% Senior Subordinated Notes, net of unamortized discount
    of $16,327 and zero, respectively


5/1/2016



208,673



7.25% Senior Subordinated Notes, net of unamortized
    discount of $1,127 and $1,229, respectively


12/1/2017



148,873



148,771Total





$
1,214,097


$
1,319,811   Senior
    Subordinated Notes
     98




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      
    limitations on incurrence of additional debt, restrictions on
    asset dispositions, and restricted payments;
    a requirement that EAC maintain a current ratio (as defined in
    the indentures) of not less than 1.0 to 1.0; and
    a requirement that EAC maintain a ratio of consolidated EBITDA
    (as defined in the indentures) to consolidated interest expense
    of not less than 2.5 to 1.0.      Revolving
    Credit Facilities
  Encore
    Acquisition Company Credit Agreement
        CommitmentRatio of Outstanding Borrowings to Borrowing Base

Fee PercentageLess than .90 to 1


0.375
%Greater than or equal to .90 to 1


0.500
%    99




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Applicable Margin for

Applicable Margin forRatio of Outstanding Borrowings to Borrowing Base

Eurodollar Loans

Base Rate LoansLess than .50 to 1


1.750
%


0.500
%Greater than or equal to .50 to 1 but less than .75 to 1


2.000
%


0.750
%Greater than or equal to .75 to 1 but less than .90 to 1


2.250
%


1.000
%Greater than or equal to .90 to 1


2.500
%


1.250
%         
    a prohibition against incurring debt, subject to permitted
    exceptions;
    a prohibition against paying dividends or making distributions,
    purchasing or redeeming capital stock, or prepaying
    indebtedness, subject to permitted exceptions;
    a restriction on creating liens on the assets of EAC and its
    restricted subsidiaries, subject to permitted exceptions;
    restrictions on merging and selling assets outside the ordinary
    course of business;
    restrictions on use of proceeds, investments, transactions with
    affiliates, or change of principal business;
    a provision limiting oil and natural gas hedging transactions
    (other than puts) to a volume not exceeding 75 percent of
    anticipated production from proved producing reserves;
    a requirement that EAC maintain a ratio of consolidated current
    assets to consolidated current liabilities of not less than 1.0
    to 1.0; and
    a requirement that EAC maintain a ratio of consolidated EBITDA
    to the sum of consolidated net interest expense plus letter of
    credit fees of not less than 2.5 to 1.0.      
    failure to pay principal on any loan when due;
    failure to pay accrued interest on any loan or fees when due and
    such failure continues for more than three days; 100




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   
    failure to observe or perform covenants and agreements contained
    in the EAC Credit Agreement, subject in some cases to a
    30-day grace
    period after discovery or notice of such failure;
    failure to make a payment when due on any other debt in a
    principal amount equal to or greater than $15 million or
    any other event or condition occurs which results in the
    acceleration of such debt or entitles the holder of such debt to
    accelerate the maturity of such debt;
    the commencement of liquidation, reorganization, or similar
    proceedings with respect to EAC or any guarantor under
    bankruptcy or insolvency law, or the failure of EAC or any
    guarantor generally to pay its debts as they become due;
    the entry of one or more judgments in excess of $15 million
    (to the extent not covered by insurance) and such judgment(s)
    remain unsatisfied and unstayed for 30 days;
    the occurrence of certain ERISA events involving an amount in
    excess of $15 million;
    there cease to exist liens covering at least 80 percent of
    the borrowing base properties; or
    the occurrence of a change in control.    Encore
    Energy Partners Operating LLC Credit Agreement
           101




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Applicable Margin for


Applicable Margin forRatio of Outstanding Borrowings to Borrowing Base

Eurodollar Loans


Base Rate LoansLess than .50 to 1


2.250
%


1.250
%Greater than or equal to .50 to 1 but less than .75 to 1


2.500
%


1.500
%Greater than or equal to .75 to 1 but less than .90 to 1


2.750
%


1.750
%Greater than or equal to .90 to 1


3.000
%


2.000
%         
    a prohibition against incurring debt, subject to permitted
    exceptions;
    a prohibition against purchasing or redeeming capital stock, or
    prepaying indebtedness, subject to permitted exceptions;
    a restriction on creating liens on the assets of ENP, OLLC, and
    OLLCs restricted subsidiaries, subject to permitted
    exceptions;
    restrictions on merging and selling assets outside the ordinary
    course of business;
    restrictions on use of proceeds, investments, transactions with
    affiliates, or change of principal business;
    a provision limiting oil and natural gas hedging transactions
    (other than puts) to a volume not exceeding 75 percent of
    anticipated production from proved producing reserves;
    a requirement that ENP and OLLC maintain a ratio of consolidated
    current assets to consolidated current liabilities of not less
    than 1.0 to 1.0;
    a requirement that ENP and OLLC maintain a ratio of consolidated
    EBITDA to the sum of consolidated net interest expense plus
    letter of credit fees of not less than 2.5 to 1.0; and
    a requirement that ENP and OLLC maintain a ratio of consolidated
    funded debt to consolidated adjusted EBITDA of not more than 3.5
    to 1.0.      
    failure to pay principal on any loan when due;
    failure to pay accrued interest on any loan or fees when due and
    such failure continues for more than three days; 102




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   
    failure to observe or perform covenants and agreements contained
    in the OLLC Credit Agreement, subject in some cases to a
    30-day grace
    period after discovery or notice of such failure;
    failure to make a payment when due on any other debt in a
    principal amount equal to or greater than $3 million or any
    other event or condition occurs which results in the
    acceleration of such debt or entitles the holder of such debt to
    accelerate the maturity of such debt;
    the commencement of liquidation, reorganization, or similar
    proceedings with respect to OLLC or any guarantor under
    bankruptcy or insolvency law, or the failure of OLLC or any
    guarantor generally to pay its debts as they become due;
    the entry of one or more judgments in excess of $3 million
    (to the extent not covered by insurance) and such judgment(s)
    remain unsatisfied and unstayed for 30 days;
    the occurrence of certain ERISA events involving an amount in
    excess of $3 million;
    there cease to exist liens covering at least 80 percent of
    the borrowing base properties; or
    the occurrence of a change in control.    Long-Term
    Debt Maturities
    Payments Due by PeriodTotal


2010


2011


2012


2013


2014


Thereafter(In thousands)6.25% Notes

$
150,000


$



$



$



$



$
150,000


$
6.0% Notes


300,000























300,0009.5% Notes


225,000























225,0007.25% Notes


150,000























150,000Revolving credit facilities


410,000











410,000











Total

$
1,235,000


$



$



$
410,000


$



$
150,000


$
675,000    103




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 8.
    Taxes  Income
    Taxes
    Year Ended December 31,2009


2008


2007(In thousands)Federal:Current

$
(14,638
)

$
(7,626
)

$
(1,888
)Deferred


55,149



(222,651
)


(11,229
)Total federal


40,511



(230,277
)


(13,117
)State, net of federal benefit:Current


(4,469
)


(1,381
)


Deferred


(3,869
)


(9,963
)


(1,359
)Total state


(8,338
)


(11,344
)


(1,359
)Income tax benefit (provision)(a)

$
32,173


$
(241,621
)

$
(14,476
)     (a)
    
    Excludes an excess tax benefit related to stock option exercises
    and vesting of restricted stock, which was recorded directly to
    additional paid-in capital, of $0.3 million and
    $2.1 million during 2009 and 2008, respectively. During
    2007, EAC did not recognize an excess tax benefit related to
    stock option exercises and vesting of restricted stock.    Year Ended December 31,2009


2008


2007(In thousands)Income (loss) before income taxes

$
(113,308
)

$
672,433


$
31,631Noncontrolling interest


(16,752
)


54,252



(7,478
)Income (loss) before income taxes and noncontrolling interest

$
(130,060
)

$
726,685


$
24,153Income taxes at the Federal statutory rate

$
45,521


$
(254,340
)

$
(8,454
)State income taxes, net of federal benefit


2,943



(12,861
)


(716
)Change in estimated future state tax rate


(9,075
)


2,113



(495
)Tax on income attributable to noncontrolling interest


(5,863
)


18,988



(2,617
)Provision to return adjustment


(1,910
)


246



11Nondeductible deferred compensation expense






(1,124
)


(1,963
)Permanent and other


557



5,357



(242
)Income tax benefit (provision)

$
32,173


$
(241,621
)

$
(14,476
)  104




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    December 31,2009


2008(In thousands)Current:Assets:Unrealized hedge loss in accumulated other comprehensive loss

$



$
222Net operating loss carryforward


1,312



Other


5,473



2,422Total current deferred tax assets


6,785



2,644Liabilities:Prepaid insurance


(415
)


Unrealized hedge gain in accumulated other comprehensive loss


(136
)


Derivative fair value gain


(24,923
)


(108,412
)Total current deferred tax liabilities


(25,474
)


(108,412
)Net current deferred tax liability

$
(18,689
)

$
(105,768
)Long-term:Assets:Alternative minimum tax credits

$
2,262


$
2,300Unrealized hedge loss in accumulated other comprehensive loss


757



735Derivative fair value loss


40,064



Tertiary recovery credits


3,385



8,889Net operating loss carryforward






1,439Change in accounting method






5,583Asset retirement obligations


17,575



17,842Deferred equity-based compensation


9,153



6,757Acquisition cost capitalized


875



Other


211



1,556Total long-term deferred tax assets


74,282



45,101Liabilities:Derivative fair value gain






(2,711
)Book basis of oil and natural gas properties in excess of tax
    basis


(527,392
)


(459,305
)Total long-term deferred tax liabilities


(527,392
)


(462,016
)Net long-term deferred tax liability

$
(453,110
)

$
(416,915
)    105




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Federal


StateExpiration Date

AMT Credits


NOL(In thousands)2012

$



$
512025






2262026






1522027






6032028






420Indefinite


2,262



$
2,262


$
1,452   Note 9.
    Equity    Stock
    Repurchase Programs
      Stock
    Option Exercises and Restricted Stock Vestings
    Preferred
    Stock
   106




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Issuance
    of EAC Common Stock
    Issuances
    of ENP Common Units
           107




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    ENP Common Units Owned


EAC% of ENP


ENP GP Units


EAC % ofDate

EAC


Others


Total


Common Units


Owned by EAC


All ENP Units12/31/2007


14,039,279



10,148,400



24,187,679



58.0
%


504,851



58.9
%Issuance of common units in acquisition of Permian and Williston
    Basin Assets


6,884,776







6,884,7762/7/2008


20,924,055



10,148,400



31,072,455



67.3
%


504,851



67.9
%Issuance of common units in acquisition of net profits interest






283,700



283,7005/1/2008


20,924,055



10,432,100



31,356,155



66.7
%


504,851



67.3
%Vesting of phantom units






6,250



6,25010/31/2008


20,924,055



10,438,350



31,362,405



66.7
%


504,851



67.2
%Conversion of management incentive units






1,715,205



1,715,20512/31/2008


20,924,055



12,153,555



33,077,610



63.3
%


504,851



63.8
%Common unit offering






2,760,000



2,760,0005/22/2009


20,924,055



14,913,555



35,837,610



58.4
%


504,851



59.0
%Common unit offering






9,430,000



9,430,0007/22/2009


20,924,055



24,343,555



45,267,610



46.2
%


504,851



46.8
%Vesting of phantom units






12,500



12,50010/30/2009


20,924,055



24,356,055



45,280,110



46.2
%


504,851



46.8
%Conversion of management incentive units






5,237



5,23712/31/2009


20,924,055



24,361,292



45,285,347



46.2
%


504,851



46.8
%   Rights
    Plan
       108




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 10.
    Earnings
    Per Share  260-10 260-10. 260-10. 260-10.
    Year Ended December 31,2009


2008


2007(In thousands, except per share amounts)Basic Earnings Per ShareNumerator:Undistributed net income (loss) attributable to EAC

$
(81,135
)

$
430,812


$
17,155Participation rights of unvested restricted stock in
    undistributed earnings(a)






(7,595
)


(291
)Basic undistributed net income (loss) attributable to EAC common
    shares

$
(81,135
)

$
423,217


$
16,864Denominator:Basic weighted average shares outstanding


52,634



52,270



53,170Basic EPS attributable to EAC common shares

$
(1.54
)

$
8.10


$
0.32Diluted Earnings Per ShareNumerator:Undistributed net income (loss) attributable to EAC

$
(81,135
)

$
430,812


$
17,155Participation rights of unvested restricted stock in
    undistributed earnings(a)






(7,511
)


(289
)Diluted undistributed net income (loss) attributable to EAC
    common shares

$
(81,135
)

$
423,301


$
16,866Denominator:Basic weighted average shares outstanding


52,634



52,270



53,170Effect of dilutive options(b)






596



459Diluted weighted average shares outstanding


52,634



52,866



53,629Diluted EPS  attributable to EAC common shares

$
(1.54
)

$
8.01


$
0.31     (a)
    
    Unvested restricted stock has no contractual obligation to
    absorb losses of EAC. Therefore, for 2009, 920,122 shares
    of restricted stock were outstanding but were excluded from the
    earnings per share calculations because their effect would have
    been antidilutive. Please read Note 11. Employee
    Benefit Plans for additional discussion of restricted
    stock.(b)
    
    For 2009, 2008, and 2007, options to purchase 1,729,591,
    157,614, and 121,651 shares of common stock, respectively,
    were outstanding but were excluded from the earnings per share
    calculations because their effect would have been antidilutive.
    Please read Note 11. Employee Benefit Plans for
    additional discussion of stock options. 109




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 11.
    Employee
    Benefit Plans  401(k)
    Plan
    Incentive
    Stock Plans
        
    an employee may not be granted awards covering or relating to
    more than 300,000 shares of common stock during any
    calendar year;
    a non-employee director may not be granted awards covering or
    relating to more than 20,000 shares of common stock during
    any calendar year; and
    an employee may not receive awards consisting of cash (including
    cash awards that are granted as performance awards) in respect
    of any calendar year having grant date fair value in excess of
    $5.0 million.   110




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Stock Options.
  Year Ended December 31,2009


2008


2007Expected volatility


51.9
%


33.7
%


35.7
%Expected dividend yield


0.0
%


0.0
%


0.0
%Expected term (in years)


6.25



6.25



6.0Risk-free interest rate


2.1
%


3.0
%


4.8
%Weighted-average grant-date fair value per share

$
15.81


$
13.15


$
11.16       Year Ended December 31,2009


2008


2007WeightedAverageWeighted


Remaining


Aggregate





Weighted





WeightedNumber of


Average


Contractual


Intrinsic


Number of


Average


Number of


AverageOptions


Strike Price


Term


Value


Options


Strike Price


Options


Strike Price(In thousands)Outstanding at beginning of year


1,497,413


$
18.02











1,381,782


$
16.03



1,337,118


$
14.44Granted


269,417



30.55











176,170



33.76



200,059



25.73Forfeited or expired


(14,134
)


30.93











(14,923
)


30.83



(26,686
)


27.15Exercised


(23,105
)


20.17











(45,616
)


14.11



(128,709
)


12.34Outstanding at end of year


1,729,591



19.84



4.9


$
48,738



1,497,413



18.02



1,381,782



16.03Exercisable at end of year


1,298,056



16.23



3.6



41,262



1,177,015



14.65



1,103,018



13.25    111




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Weighted





WeightedRange of

Number of


Average


Average


Number ofStrike Prices

Options


Life


Strike


OptionsYear of Grant

Per Share

Outstanding


(Years)


Price


Exercisable2001

$8.33 to $9.33


400,236



1.5


$
8.87



400,2362002

$8.50 to $12.40


283,836



2.8



11.94



283,8362003

$11.49 to $13.61


35,127



3.5



12.25



35,1272004

$17.17 to $19.77


259,075



4.1



17.55



259,0752005

$26.55


66,676



5.1


$
26.55



66,6762006

$31.10


87,961



6.1


$
31.10



87,9612007

$25.73


173,997



7.1


$
25.73



115,1702008

$33.76


157,884



8.1


$
33.76



49,9752009

$30.55


264,799



9.1


$
30.55



1,729,591











1,298,056   Restricted Stock.
  WeightedAverageNumber of


Grant DateShares


Fair ValueOutstanding at January 1, 2009


938,407


$
30.67Granted


412,449



30.52Vested


(408,478
)


29.25Forfeited


(22,256
)


30.31Outstanding at December 31, 2009


920,122



31.20     Year of VestingYear of Grant

2010


2011


2012


2013


Total2005


69,592















69,5922006


59,377















59,3772007


77,186



77,143



4,166







158,4952008


67,494



91,417



67,333







226,2442009


46,987



46,889



46,806



46,712



187,394Total


320,636



215,449



118,305



46,712



701,102  112




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year of VestingYear of Grant

2010

2011

2012

2013

Total2009


54,755



54,755



54,755



54,755



219,020    113




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 12.
    Fair
    Value Measurements    December 31,2009

2008Book

Fair

Book

FairValue

Value

Value

Value(In thousands)Assets:Cash and cash equivalents

$
13,958


$
13,958


$
2,039


$
2,039Accounts receivable, net


114,872



114,872



117,995



117,995Plugging bond


874



991



824



1,202Bell Creek escrow


9,263



9,263



9,229



9,241Commodity derivative contracts


61,031



61,031



387,841



387,841Long-term receivables, net


65,939



65,939



71,986



71,986Liabilities:Accounts payable


7,138



7,138



10,017



10,0176.25% Senior Subordinated Notes


150,000



146,625



150,000



101,2506.0% Senior Subordinated Notes


296,551



300,375



296,040



194,2509.5% Senior Subordinated Notes


208,673



231,750







7.25% Senior Subordinated Notes


148,873



150,000



148,771



94,500Revolving credit facilities


410,000



410,000



725,000



725,000Commodity derivative contracts


60,166



60,166



229



229Deferred premiums on commodity derivative contracts


48,821



48,821



67,610



67,610Interest rate swaps


3,669



3,669



4,559



4,559   marked-to-market
  Commodity Derivative Contracts.
 114




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Oil
    Derivative Contracts
  Average


Weighted



Average


Weighted



Average


Weighted



Asset /Daily


Average



Daily


Average



Daily


Average



(Liability)Floor


Floor



Cap


Cap



Swap


Swap



Fair MarketPeriod

Volume


Price



Volume


Price



Volume


Price



Value(Bbls)


(per Bbl)



(Bbls)


(per Bbl)



(Bbls)


(per Bbl)



(In thousands)2010




























$
(30,760
)880


$
80.00




2,940


$
90.57







$
5,500



73.47




3,000



74.13




3,885



77.798,385



62.83




500



65.60




1,750



64.081,000



56.00













1,000



59.702011





























17,7204,880



80.00




2,940



94.44




325



80.002,500



70.00













1,060



78.424,385



65.00













250



69.652012





























(5,120
)750



70.00




500



82.05




835



81.192,135



65.00




250



79.25




1,300



76.54$
(18,160
)  115




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Natural
    Gas Derivative Contracts
  Average


Weighted



Average


Weighted



Average


WeightedDaily


Average



Daily


Average



Daily


Average



AssetFloor


Floor



Cap


Cap



Swap


Swap



Fair MarketPeriod

Volume


Price



Volume


Price



Volume


Price



Value(Mcf)


(per Mcf)



(Mcf)


(per Mcf)



(Mcf)


(per Mcf)



(In thousands)Jan.  June 2010




























$
5,9493,800


$
8.20




3,800


$
9.58




25,452


$
6.464,698



7.26













20,550



5.23July  Dec. 2010





























6,6443,800



8.20




3,800



9.58








4,698



7.26




10,000



6.25




25,452



6.4610,000



5.13













550



5.862011





























4,6773,398



6.31













27,952



6.48

















550



5.862012





























1,755898



6.76













25,452



6.47

















550



5.86$
19,025     Counterparty Risk.
  Fair Market Value of

Fair Market Value ofOil Derivative

Natural Gas DerivativeCounterparty

Contracts Committed

Contracts Committed(In thousands)BNP Paribas

$
22,570


$
7,496Calyon


(a
)


8,550JP Morgan


10,272



(a
)Royal Bank of Canada


14,059



(a
)Wachovia


8,302



3,844     (a)
    
    Less than 10 percent.   116




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Interest Rate Swaps.
  Notional


Fixed


FloatingTerm

Amount


Rate


Rate(In thousands)Jan. 2010 - Jan. 2011

$
50,000



3.1610
%


1-month LIBORJan. 2010 - Jan. 2011


25,000



2.9650
%


1-month LIBORJan. 2010 - Jan. 2011


25,000



2.9613
%


1-month LIBORJan. 2010 - Mar. 2012


50,000



2.4200
%


1-month LIBOR     Current Period Impact.
  Year Ended December 31,2009


2008


2007(In thousands)Ineffectiveness

$
2


$
372


$
Mark-to-market
    loss (gain)


350,365



(365,495
)


36,272Premium amortization


98,395



62,352



41,051Settlements


(389,165
)


(43,465
)


35,160Total derivative fair value loss (gain)

$
59,597


$
(346,236
)

$
112,483     Accumulated Other Comprehensive Loss.
 117




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Tabular
    Disclosures of Fair Value Measurements
    Asset Derivatives



Liability DerivativesDecember 31, 2009


December 31, 2008



December 31, 2009


December 31, 2008Balance Sheet

Fair


Balance Sheet

Fair



Balance Sheet




Balance SheetLocation

Value


Location

Value



Location

Fair Value


Location

Fair ValueDerivatives not designated as hedging instruments under ASC
    815Commodity derivative contracts

Derivatives - current

$
25,825


Derivatives - current

$
349,344



Derivatives - current

$
43,993


Derivatives - current

$
Commodity derivative contracts

Derivatives - noncurrent


35,206


Derivatives -noncurrent


38,497



Derivatives - noncurrent


16,173


Derivatives - noncurrent


229Total derivatives not designated as hedging instruments
    underASC 815



$
61,031




$
387,841





$
60,166




$
229Derivatives designated as hedging instruments under ASC
    815Interest rate swaps

Derivatives - current

$



Derivatives - current

$




Derivatives - current

$
3,421


Derivatives - current

$
1,297Interest rate swaps

Derivatives - noncurrent





Derivatives -noncurrent






Derivatives - noncurrent


248


Derivatives - noncurrent


3,262Total derivatives designated as hedging instruments under ASC
    815



$





$






$
3,669




$
4,559Total derivatives



$
61,031




$
387,841





$
63,835




$
4,788     Amount of Loss (Gain) Recognized In IncomeDerivatives Not Designated as

Location of Loss (Gain)


Year Ended December 31,Hedges Under ASC 815

Recognized In Income


2009


2008


2007Commodity derivative contracts


Derivative fair value loss (gain
)

$
59,595


$
(346,608
)

$
112,483     Amount of Loss Recognized inAccumulated OCI (Effective Portion)Derivatives Designated as

Year Ended December 31,Hedges Under ASC 815

2009

2008

2007Interest rate swaps

$
3,075


$
3,065


$
   Amount of Loss Reclassified from AccumulatedOCI into Income (Effective Portion)Location of Loss Reclassified from Accumulated

Year Ended December 31,OCI into Income (Effective Portion)

2009


2008


2007Interest expense

$
3,785


$
246


$
Oil and natural gas revenues






2,857



53,587$
3,785


$
3,103


$
53,587   Amount of Loss RecognizedIn Income as IneffectiveYear Ended December 31,Location of Loss Recognized in Income as Ineffective

2009

2008

2007Derivative fair value loss (gain)

$
2


$
372


$
  118




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Fair
    Value Hierarchy
  820-10 820-10
  
    Level 1  Unadjusted quoted prices are available
    in active markets for identical assets or liabilities.
    Level 2  Pricing inputs, other than quoted
    prices within Level 1, that are either directly or
    indirectly observable.
    Level 3  Pricing inputs that are unobservable
    requiring the use of valuation methodologies that result in
    managements best estimate of fair value.    
    Level 2  Fair values of oil and natural gas
    swaps were estimated using a combined income-based and
    market-based valuation methodology based upon forward commodity
    price curves obtained from independent pricing services
    reflecting broker market quotes. Fair values of interest rate
    swaps were estimated using a combined income-based and
    market-based valuation methodology based upon credit ratings and
    forward interest rate yield curves obtained from independent
    pricing services reflecting broker market quotes.
    Level 3  EACs oil and natural gas calls,
    puts, and short puts are average value options, which are not
    exchange-traded contracts. Settlement is determined by the
    average underlying price over a predetermined period of time.
    EAC uses both observable and unobservable inputs in a
    Black-Scholes valuation model to determine fair value.
    Accordingly, these derivative instruments are classified within
    the Level 3 valuation hierarchy. The observable inputs of
    EACs valuation model include: (1) current market and
    contractual prices for the underlying instruments;
    (2) quoted forward prices for oil and natural gas; and
    (3) interest rates, such as a LIBOR curve for a term
    similar to the commodity derivative contract. The unobservable
    input of EACs valuation model is volatility. The implied
    volatilities for EACs calls, puts, and short puts with
    comparable strike prices are based on the settlement values from
    certain exchange-traded contracts. The implied volatilities for
    calls, puts, and short puts where there are no exchange-traded
    contracts with the same strike price are extrapolated from
    exchange-traded implied volatilities by an independent party.   119




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Fair Value Measurements at Reporting Date UsingQuoted Prices inActive Markets for


Significant Other


SignificantAsset (Liability) at


Identical Assets


Observable Inputs


Unobservable InputsDescription

December 31, 2009


(Level 1)


(Level 2)


(Level 3)(In thousands)Oil derivative contracts  swaps

$
(38,149
)

$



$
(38,149
)

$
Oil derivative contracts  floors and caps


19,989











19,989Natural gas derivative contracts  swaps


11,026







11,026



Natural gas derivative contracts  floors and caps


7,999











7,999Interest rate swaps


(3,669
)






(3,669
)


Total

$
(2,804
)

$



$
(30,792
)

$
27,988     Fair Value Measurements Using SignificantUnobservable Inputs (Level 3)Oil Derivative


Natural GasContracts -


Derivative Contracts -Floors and Caps


Floors and Caps


Total(In thousands)Balance at January 1, 2009

$
337,335


$
12,741


$
350,076Total gains (losses):Included in earnings


(7,223
)


23,736



16,513Purchases


9,012



844



9,856Settlements


(319,135
)


(29,322
)


(348,457
)Balance at December 31, 2009

$
19,989


$
7,999


$
27,988The amount of total gains or losses for the period included in
    earnings attributable to the change in unrealized gains or
    losses relating to assets still held at the reporting date

$
(7,223
)

$
23,736


$
16,513        120




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    
    Level 3 Fair values of asset retirement
    obligations are determined using discounted cash flow
    methodologies based on inputs, such as plugging costs and
    reserve lives, which are not readily available in public
    markets. See Note 5. Asset Retirement
    Obligations for additional discussion of EACs asset
    retirement obligations.    Fair Value Measurements UsingQuoted Prices inActive Markets for

Significant Other

SignificantLiability at

Identical Assets

Observable Inputs

Unobservable Inputs

Total GainsDescription

December 31, 2009

(Level 1)

(Level 2)

(Level 3)

(Losses)(In thousands)Asset retirement obligations

$
3,966


$



$



$
3,966


$
   Note 13.
    Related
    Party Transactions      Note 14.
    Financial
    Statements of Subsidiary Guarantors    
    EAP Properties, Inc.;
    EAP Operating, LLC;
    Encore Operating, L.P.; and
    Encore Operating Louisiana, LLC.    
    ENP;
    OLLC;
    GP LLC; 121




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   
    Encore Partners GP Holdings LLC;
    Encore Partners LP Holdings LLC;
    Encore Energy Partners Finance Corporation; and
    Encore Clear Fork Pipeline LLC.   122




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  CONDENSED
    CONSOLIDATING BALANCE SHEET
    December 31, 2009
  Guarantor


Non-Guarantor





ConsolidatedParent


Subsidiaries


Subsidiaries


Eliminations


Total(In thousands)ASSETSCurrent assets:Cash and cash equivalents

$
567


$
11,637


$
1,754


$



$
13,958Other current assets


2,314



145,747



46,494



(10,994
)


183,561Total current assets


2,881



157,384



48,248



(10,994
)


197,519Properties and equipment, at cost  successful efforts
    method:Proved properties, including wells and related equipment






3,352,789



851,833







4,204,622Unproved properties






95,546



55







95,601Accumulated depletion, depreciation, and amortization






(847,850
)


(210,417
)






(1,058,267
)



2,600,485



641,471







3,241,956Other property and equipment, net






15,018



444







15,462Other assets, net


16,370



163,290



29,488



(124
)


209,024Investment in subsidiaries


2,812,831



(8,742
)






(2,804,089
)


Total assets

$
2,832,082


$
2,927,435


$
719,651


$
(2,815,207
)

$
3,663,961LIABILITIES AND EQUITYCurrent liabilities

$
43,841


$
194,836


$
32,690


$
(10,994
)

$
260,373Deferred taxes


453,225



9







(124
)


453,110Long-term debt


959,097







255,000







1,214,097Other liabilities






79,591



25,957







105,548Total liabilities


1,456,163



274,436



313,647



(11,118
)


2,033,128Commitments and contingencies (see Note 4)Total equity


1,375,919



2,652,999



406,004



(2,804,089
)


1,630,833Total liabilities and equity

$
2,832,082


$
2,927,435


$
719,651


$
(2,815,207
)

$
3,663,961  123




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  CONDENSED
    CONSOLIDATING BALANCE SHEET
    December 31, 2008
  Guarantor


Non-Guarantor





ConsolidatedParent


Subsidiaries


Subsidiaries


Eliminations


Total(In thousands)ASSETSCurrent assets:Cash and cash equivalents

$
607


$
813


$
619


$



$
2,039Other current assets


29,004



421,392



90,797



(2,302
)


538,891Total current assets


29,611



422,205



91,416



(2,302
)


540,930Properties and equipment, at cost  successful efforts
    method:Proved properties, including wells and related equipment






3,016,937



521,522







3,538,459Unproved properties






124,272



67







124,339Accumulated depletion, depreciation, and amortization






(670,991
)


(100,573
)






(771,564
)



2,470,218



421,016







2,891,234Other property and equipment, net






11,877



562







12,439Other assets, net


12,846



129,482



46,264







188,592Investment in subsidiaries


2,976,208



(12,865
)






(2,963,343
)


Total assets

$
3,018,665


$
3,020,917


$
559,258


$
(2,965,645
)

$
3,633,195LIABILITIES AND EQUITYCurrent liabilities

$
118,089


$
215,640


$
20,825


$
(2,302
)

$
352,252Deferred taxes


416,637







278







416,915Long-term debt


1,169,811







150,000







1,319,811Other liabilities






48,000



12,969







60,969Total liabilities


1,704,537



263,640



184,072



(2,302
)


2,149,947Commitments and contingencies (see Note 4)Total equity


1,314,128



2,757,277



375,186



(2,963,343
)


1,483,248Total liabilities and equity

$
3,018,665


$
3,020,917


$
559,258


$
(2,965,645
)

$
3,633,195  124




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  CONSOLIDATING
    STATEMENT OF OPERATIONS AND
    COMPREHENSIVE INCOME (LOSS)
    For the Year Ended December 31, 2009
  Guarantor


Non-Guarantor





ConsolidatedParent


Subsidiaries


Subsidiaries


Eliminations


Total(In thousands)Revenues:Oil

$



$
421,780


$
127,611


$



$
549,391Natural gas






108,757



22,428







131,185Marketing






4,362



478







4,840Total revenues






534,899



150,517







685,416Expenses:Production:Lease operating






123,386



41,676







165,062Production, ad valorem, and severance taxes






53,440



16,099







69,539Depletion, depreciation, and amortization






234,019



56,757







290,776Impairment of long-lived assets






9,979











9,979Exploration






49,356



3,132







52,488General and administrative


19,771



28,445



11,378



(5,570
)


54,024Marketing






3,692



302







3,994Derivative fair value loss






12,133



47,464







59,597Provision for doubtful accounts






7,686











7,686Other operating


206



22,456



3,099







25,761Total expenses


19,977



544,592



179,907



(5,570
)


738,906Operating income (loss)


(19,977
)


(9,693
)


(29,390
)


5,570



(53,490
)Other income (expenses):Interest


(68,043
)






(10,974
)






(79,017
)Equity income from subsidiaries


(25,035
)


(12,064
)






37,099



Other


(228
)


8,199



46



(5,570
)


2,447Total other expenses


(93,306
)


(3,865
)


(10,928
)


31,529



(76,570
)Income (loss) before income taxes


(113,283
)


(13,558
)


(40,318
)


37,099



(130,060
)Income tax benefit (provision)


32,070



117



(14
)






32,173Consolidated net income (loss)


(81,213
)


(13,441
)


(40,332
)


37,099



(97,887
)Change in deferred hedge loss on interest rate swaps, net of tax


(339
)






839







500Consolidated comprehensive income (loss)

$
(81,552
)

$
(13,441
)

$
(39,493
)

$
37,099


$
(97,387
)  125




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  CONSOLIDATING
    STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
    For the Year Ended December 31, 2008
  Guarantor


Non-Guarantor





ConsolidatedParent


Subsidiaries


Subsidiaries


Eliminations


Total(In thousands)Revenues:Oil

$



$
749,864


$
147,579


$



$
897,443Natural gas






192,942



34,537







227,479Marketing






5,172



5,324







10,496Total revenues






947,978



187,440







1,135,418Expenses:Production:Lease operating






146,460



28,655







175,115Production, ad valorem, and severance taxes






91,809



18,835







110,644Depletion, depreciation, and amortization






190,548



37,704







228,252Impairment of long-lived assets






59,526











59,526Exploration






39,026



181







39,207General and administrative


15,801



24,751



12,135



(4,266
)


48,421Marketing






4,104



5,466







9,570Derivative fair value gain






(249,356
)


(96,880
)






(346,236
)Provision for doubtful accounts






1,984











1,984Other operating


165



11,485



1,325







12,975Total expenses


15,966



320,337



7,421



(4,266
)


339,458Operating income (loss)


(15,966
)


627,641



180,019



4,266



795,960Other income (expenses):Interest


(66,204
)






(6,969
)






(73,173
)Equity income from subsidiaries


736,408



51,468







(787,876
)


Other


98



7,967



99



(4,266
)


3,898Total other expenses


670,302



59,435



(6,870
)


(792,142
)


(69,275
)Income before income taxes


654,336



687,076



173,149



(787,876
)


726,685Income tax provision


(240,986
)






(635
)






(241,621
)Consolidated net income


413,350



687,076



172,514



(787,876
)


485,064Amortization of deferred loss on commodity derivative contracts,
    net of tax


(1,071
)


2,857











1,786Change in deferred hedge gain on interest rate swaps, net of tax


(625
)






(2,692
)






(3,317
)Comprehensive income

$
411,654


$
689,933


$
169,822


$
(787,876
)

$
483,533  126




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  CONSOLIDATING
    STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
    For the Year Ended December 31, 2007
  Guarantor


Non-Guarantor





ConsolidatedParent


Subsidiaries


Subsidiaries


Eliminations


Total(In thousands)Revenues:Oil

$



$
503,981


$
58,836


$



$
562,817Natural gas






137,838



12,269







150,107Marketing






33,439



8,582







42,021Total revenues






675,258



79,687







754,945Expenses:Production:Lease operating






129,506



13,920







143,426Production, ad valorem, and severance taxes






66,014



8,571







74,585Depletion, depreciation, and amortization






157,982



25,998







183,980Exploration






27,726











27,726General and administrative


15,107



15,354



10,707



(2,044
)


39,124Marketing






33,876



6,673







40,549Derivative fair value loss






86,182



26,301







112,483Provision for doubtful accounts






5,816











5,816Other operating


221



16,083



762







17,066Total expenses


15,328



538,539



92,932



(2,044
)


644,755Operating income (loss)


(15,328
)


136,719



(13,245
)


2,044



110,190Other income (expenses):Interest


(82,825
)


(6,415
)


(12,294
)


12,830



(88,704
)Equity income (loss) from subsidiaries


123,381



(3,205
)






(120,176
)


Other


6,405



10,940



196



(14,874
)


2,667Total other expenses


46,961



1,320



(12,098
)


(122,220
)


(86,037
)Income (loss) before income taxes


31,633



138,039



(25,343
)


(120,176
)


24,153Income tax benefit (provision)


(14,478
)






2







(14,476
)Consolidated net income (loss)


17,155



138,039



(25,341
)


(120,176
)


9,677Amortization of deferred loss on commodity derivative contracts,
    net of tax


(20,047
)


53,588











33,541Comprehensive income (loss)

$
(2,892
)

$
191,627


$
(25,341
)

$
(120,176
)

$
43,218  127




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  CONDENSED
    CONSOLIDATING STATEMENT OF CASH FLOWS
    For the Year Ended December 31, 2009
  Guarantor


Non-Guarantor





ConsolidatedParent


Subsidiaries


Subsidiaries


Eliminations


Total(In thousands)Cash flows from operating activities:Net cash provided by (used in) operating activities

$
(71,908
)

$
702,614


$
114,971


$



$
745,677Cash flows from investing activities:Acquisition of oil and natural gas properties






(400,997
)


(31,960
)






(432,957
)Development of oil and natural gas properties






(333,261
)


(9,037
)






(342,298
)Investments in subsidiaries


178,435











(178,435
)


Other






5,913



(88
)






5,825Net cash provided by (used in) investing activities


178,435



(728,345
)


(41,085
)


(178,435
)


(769,430
)Cash flows from financing activities:Proceeds from long-term debt, net of issuance costs


405,105







227,061







632,166Payments on long-term debt


(625,000
)






(125,000
)






(750,000
)Proceeds from issuance of EAC common stock, net of offering costs


100,608















100,608Proceeds from issuance of ENP common units, net of offering costs










170,088







170,088Net equity contributions (distributions)






84,221



(262,656
)


178,435



Other


12,720



(47,666
)


(82,244
)






(117,190
)Net cash provided by (used in) financing activities


(106,567
)


36,555



(72,751
)


178,435



35,672Increase (decrease) in cash and cash equivalents


(40
)


10,824



1,135







11,919Cash and cash equivalents, beginning of period


607



813



619







2,039Cash and cash equivalents, end of period

$
567


$
11,637


$
1,754


$



$
13,958  128




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  CONDENSED
    CONSOLIDATING STATEMENT OF CASH FLOWS
    For the Year Ended December 31, 2008
  Guarantor


Non-Guarantor





ConsolidatedParent


Subsidiaries


Subsidiaries


Eliminations


Total(In thousands)Cash flows from operating activities:Net cash provided by (used in) operating activities

$
629,345


$
(81,882
)

$
115,774


$



$
663,237Cash flows from investing activities:Acquisition of oil and natural gas properties






(142,471
)


(88
)






(142,559
)Development of oil and natural gas properties






(543,399
)


(17,598
)






(560,997
)Investments in subsidiaries


(681,766
)










681,766



Other






(24,475
)


(315
)






(24,790
)Net cash used in investing activities


(681,766
)


(710,345
)


(18,001
)


681,766



(728,346
)Cash flows from financing activities:Repurchase of common stock


(67,170
)














(67,170
)Proceeds from long-term debt, net of issuance costs


1,127,029







243,310







1,370,339Payments on long-term debt


(1,031,500
)






(141,000
)






(1,172,500
)Net equity distributions






806,460



(124,694
)


(681,766
)


Other


24,668



(15,120
)


(74,773
)






(65,225
)Net cash provided by (used in) financing activities


53,027



791,340



(97,157
)


(681,766
)


65,444Increase (decrease) in cash and cash equivalents


606



(887
)


616







335Cash and cash equivalents, beginning of period


1



1,700



3







1,704Cash and cash equivalents, end of period

$
607


$
813


$
619


$



$
2,039  129




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  CONDENSED
    CONSOLIDATING STATEMENT OF CASH FLOWS
    For the Year Ended December 31, 2007
  Guarantor


Non-Guarantor





ConsolidatedParent


Subsidiaries


Subsidiaries


Eliminations


Total(In thousands)Cash flows from operating activities:Net cash provided by (used in) operating activities

$
(305,868
)

$
615,484


$
10,091


$



$
319,707Cash flows from investing activities:Proceeds from disposition of assets






287,928











287,928Acquisition of oil and natural gas properties






(518,251
)


(330,294
)






(848,545
)Development of oil and natural gas properties






(329,252
)


(6,645
)






(335,897
)Investments in subsidiaries


(93,658
)










93,658



Other






(32,585
)


(457
)






(33,042
)Net cash used in investing activities


(93,658
)


(592,160
)


(337,396
)


93,658



(929,556
)Cash flows from financing activities:Proceeds from issuance of ENP common units, net of issuance costs










193,461







193,461Proceeds from long-term debt, net of issuance costs


1,208,501







270,758







1,479,259Payments on long-term debt


(809,428
)






(225,000
)






(1,034,428
)Net equity contributions










93,658



(93,658
)


Other


454



(22,387
)


(5,569
)






(27,502
)Net cash provided by (used in) financing activities


399,527



(22,387
)


327,308



(93,658
)


610,790Increase in cash and cash equivalents


1



937



3







941Cash and cash equivalents, beginning of period






763











763Cash and cash equivalents, end of period

$
1


$
1,700


$
3


$



$
1,704   Note 15.
    ENP   130




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Contribution,
    Conveyance and Assumption Agreement
    
    Encore Operating contributed certain oil and natural gas
    properties and related assets in the Permian Basin in West Texas
    to ENP in exchange for 4,043,478 common units; and
    EAC agreed to indemnify ENP for certain environmental
    liabilities, tax liabilities, and title defects, as well as
    defects relating to retained assets and liabilities, occurring
    or existing before the closing.    Administrative
    Services Agreement
        
    beginning on the first day of April in each year by an amount
    equal to the product of the then-current administrative fee
    multiplied by the COPAS Wage Index Adjustment for that year;
    if ENP acquires additional assets, Encore Operating may propose
    an increase in its administrative fee that covers the provision
    of services for such additional assets; however, such proposal
    must be approved by the board of directors of GP LLC upon the
    recommendation of its conflicts committee; and
    otherwise as agreed upon by Encore Operating and GP LLC, with
    the approval of the conflicts committee of the board of
    directors of GP LLC. 131




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Sales
    of Assets to ENP
          Shelf
    Registration Statement on
    Form S-3
  Form S-3
  Public
    Offerings of Common Units
     132




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Long-Term
    Incentive Plan
      Phantom Units.
    WeightedAverageNumber of


Grant DateShares


Fair ValueOutstanding at January 1, 2009


43,750


$
18.67Granted


25,000



18.13Vested


(12,500
)


18.83Forfeited






Outstanding at December 31, 2009


56,250



18.40     Year of VestingYear of Grant

2010


2011


2012


2013


Total2007


5,000



5,000











10,0002008


7,500



7,500



6,250







21,2502009


6,250



6,250



6,250



6,250



25,000Total


18,750



18,750



12,500



6,250



56,250    133




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Management
    Incentive Units
      Distributions
      Note 16.
    Segment
    Information  280-10 Disclosure about
    Segments of an Enterprise and Related Information 932-235 Disclosures about Oil
    and Gas Producing Activities
  134




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  For the Year Ended December 31, 2009EAC








ConsolidatedStandalone


ENP


Eliminations


Total(In thousands)Revenues:Oil

$
421,780


$
127,611


$



$
549,391Natural gas


108,757



22,428







131,185Marketing


4,362



478







4,840Total revenues


534,899



150,517







685,416Expenses:Production:Lease operating


123,386



41,676







165,062Production, ad valorem, and severance taxes


53,440



16,099







69,539Depletion, depreciation, and amortization


234,019



56,757







290,776Impairment of long-lived assets


9,979











9,979Exploration


49,356



3,132







52,488General and administrative


48,219



11,375



(5,570
)


54,024Marketing


3,692



302







3,994Derivative fair value loss


12,133



47,464







59,597Other operating


30,348



3,099







33,447Total expenses


564,572



179,904



(5,570
)


738,906Operating income (loss)


(29,673
)


(29,387
)


5,570



(53,490
)Other income (expenses):Interest


(68,043
)


(10,974
)






(79,017
)Other


7,971



46



(5,570
)


2,447Total other expenses


(60,072
)


(10,928
)


(5,570
)


(76,570
)Income (loss) before income taxes


(89,745
)


(40,315
)






(130,060
)Income tax benefit (provision)


32,187



(14
)






32,173Consolidated net loss


(57,558
)


(40,329
)






(97,887
)Change in deferred hedge loss on interest rate swaps, net of tax


(339
)


839







500Consolidated comprehensive loss

$
(57,897
)

$
(39,490
)

$



$
(97,387
)Costs incurred related to oil and natural gas properties

$
665,800


$
40,686


$



$
706,486   135




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  For the Year Ended December 31, 2008EAC








ConsolidatedStandalone


ENP


Eliminations


Total(In thousands)Revenues:Oil

$
670,830


$
226,613


$



$
897,443Natural gas


173,535



53,944







227,479Marketing


5,172



5,324







10,496Total revenues


849,537



285,881







1,135,418Expenses:Production:Lease operating


130,363



44,752







175,115Production, ad valorem, and severance taxes


82,497



28,147







110,644Depletion, depreciation, and amortization


170,715



57,537







228,252Impairment of long-lived assets


59,526











59,526Exploration


39,011



196







39,207General and administrative


36,082



16,605



(4,266
)


48,421Marketing


4,104



5,466







9,570Derivative fair value gain


(249,356
)


(96,880
)






(346,236
)Other operating


13,289



1,670







14,959Total expenses


286,231



57,493



(4,266
)


339,458Operating income


563,306



228,388



4,266



795,960Other income (expenses):Interest


(66,204
)


(6,969
)






(73,173
)Other


8,065



99



(4,266
)


3,898Total other expenses


(58,139
)


(6,870
)


(4,266
)


(69,275
)Income before income taxes


505,167



221,518







726,685Income tax provision


(240,859
)


(762
)






(241,621
)Consolidated net income


264,308



220,756







485,064Amortization of deferred loss on commodity derivative contracts,
    net of tax


1,786











1,786Change in deferred hedge loss on interest rate swaps, net of tax


941



(4,258
)






(3,317
)Consolidated comprehensive income

$
267,035


$
216,498


$



$
483,533Costs incurred related to oil and natural gas properties

$
730,908


$
45,613


$



$
776,521   136




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  For the Year Ended December 31, 2007EAC








ConsolidatedStandalone


ENP


Eliminations


Total(In thousands)Revenues:Oil

$
427,271


$
135,546


$



$
562,817Natural gas


110,988



39,119







150,107Marketing


33,439



8,582







42,021Total revenues


571,698



183,247







754,945Expenses:Production:Lease operating


109,446



33,980







143,426Production, ad valorem, and severance taxes


56,873



17,712







74,585Depletion, depreciation, and amortization


136,486



47,494







183,980Exploration


27,600



126







27,726General and administrative


25,923



15,245



(2,044
)


39,124Marketing


33,876



6,673







40,549Derivative fair value loss


86,182



26,301







112,483Other operating


21,456



1,426







22,882Total expenses


497,842



148,957



(2,044
)


644,755Operating income


73,856



34,290



2,044



110,190Other income (expenses):Interest


(82,417
)


(12,702
)


6,415



(88,704
)Other


10,930



196



(8,459
)


2,667Total other expenses


(71,487
)


(12,506
)


(2,044
)


(86,037
)Income before income taxes


2,369



21,784







24,153Income tax provision


(14,398
)


(78
)






(14,476
)Consolidated net income (loss)


(12,029
)


21,706







9,677Amortization of deferred loss on commodity derivative contracts,
    net of tax


33,541











33,541Consolidated comprehensive income

$
21,512


$
21,706


$



$
43,218Costs incurred related to oil and natural gas properties

$
686,720


$
529,439


$



$
1,216,159  137




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    December 31,2009


2008(In thousands)Segment assets:EAC Standalone

$
2,952,523


$
2,823,778ENP


719,651



813,313Eliminations


(8,213
)


(3,896
)Total consolidated assets

$
3,663,961


$
3,633,195Segment liabilities:EAC Standalone

$
1,722,261


$
1,961,453ENP


313,647



193,962Eliminations


(2,780
)


(5,468
)Total consolidated liabilities

$
2,033,128


$
2,149,947   Note 17.
    Impairment
    of Long-Lived Assets      Note 18.
    Subsequent
    Events       138




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY



SUPPLEMENTARY
    INFORMATION



Capitalized
    Costs and Costs Incurred Relating to Oil and Natural Gas
    Producing Activities



The capitalized cost of oil and natural gas properties was as
    follows as of the dates indicated: December 31,2009


2008(In thousands)Properties and equipment, at cost  successful efforts
    method:Proved properties, including wells and related equipment

$
4,204,622


$
3,538,459Unproved properties


95,601



124,339Accumulated depletion, depreciation, and amortization


(1,058,267
)


(771,564
)$
3,241,956


$
2,891,234     Year Ended December 31,2009


2008


2007(In thousands)Acquisitions:Proved properties(a)

$
402,457


$
28,840


$
796,239Unproved properties


17,087



128,635



52,306Total acquisitions


419,544



157,475



848,545Development:Drilling and exploitation(b)


121,259



362,609



270,161Total development


121,259



362,609



270,161Exploration:Drilling and exploitation


163,887



252,104



95,221Geological and seismic


1,022



2,851



1,456Delay rentals


774



1,482



776Total exploration


165,683



256,437



97,453Total costs incurred

$
706,486


$
776,521


$
1,216,159     (a)
    
    Includes asset retirement obligations incurred for acquisition
    activities of $3.7 million, $0.1 million, and
    $8.3 million in 2009, 2008, and 2007, respectively.(b)
    
    Includes asset retirement obligations incurred for development
    activities of $0.3 million, $0.5 million, and
    $0.1 million during 2009, 2008, and 2007, respectively.  Oil &
    Natural Gas Producing Activities  Unaudited
     139




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  SUPPLEMENTARY
    INFORMATION  (Continued)
    2009

2008

2007Oil (per Bbl)

$
61.18


$
44.60


$
96.01Natural gas (per Mcf)

$
3.83


$
5.62


$
7.47         December 31,2009


2008


2007Proved developed reserves:Oil (MBbl)


121,401



110,014



125,213Natural gas (MMcf)


322,422



232,715



191,072Combined (MBOE)


175,138



148,800



157,058Proved undeveloped reserves:Oil (MBbl)


25,693



24,438



63,374Natural gas (MMcf)


116,650



74,805



65,375Combined (MBOE)


45,135



36,905



74,270Proved reserves:Oil (MBbl)


147,094



134,452



188,587Natural gas (MMcf)


439,072



307,520



256,447Combined (MBOE)


220,273



185,705



231,328  140




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  SUPPLEMENTARY
    INFORMATION  (Continued)
    Natural


OilOil


Gas


Equivalent(MBbl)


(MMcf)


(MBOE)Balance, December 31, 2006


153,434



306,764



204,561Purchases of
    minerals-in-place


40,534



15,667



43,146Sales of
    minerals-in-place


(1,845
)


(107,249
)


(19,719
)Extensions and discoveries


4,362



65,639



15,302Improved recovery


666



90



681Revisions of previous estimates


981



(501
)


896Production


(9,545
)


(23,963
)


(13,539
)Balance, December 31, 2007


188,587



256,447



231,328Purchases of
    minerals-in-place


266



6,220



1,303Extensions and discoveries


7,411



73,527



19,665Improved recovery


287







287Revisions of previous estimates


(52,049
)


(2,300
)


(52,432
)Production


(10,050
)


(26,374
)


(14,446
)Balance, December 31, 2008


134,452



307,520



185,705Purchases of
    minerals-in-place


6,142



107,614



24,078Sales of
    minerals-in-place


(107
)


(64
)


(117
)Extensions and discoveries


6,902



87,605



21,502Revisions of previous estimates


9,721



(29,684
)


4,774Production


(10,016
)


(33,919
)


(15,669
)Balance, December 31, 2009(a)


147,094



439,072



220,273     (a)
    
    Includes proved reserves of 28.9 MMBbls of oil and
    84.7 Bcf of natural gas (43.0 MMBOE) attributable to
    ENP in which there was a 53.2 percent noncontrolling
    interest as of December 31, 2009.  Recent SEC Rule-Making Activity. 12-month
 141




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  SUPPLEMENTARY
    INFORMATION  (Continued)
     December 31,2009


2008


2007(In thousands)Future cash inflows

$
9,416,040


$
6,754,431


$
17,394,468Future production costs


(3,960,587
)


(3,082,814
)


(5,721,804
)Future development costs


(644,323
)


(497,197
)


(469,034
)Future abandonment costs, net of salvage


(104,394
)


(96,480
)


(75,172
)Future income tax expense


(1,089,618
)


(555,370
)


(3,236,356
)Future net cash flows


3,617,118



2,522,570



7,892,10210% annual discount


(1,890,048
)


(1,302,616
)


(4,600,393
)Standardized measure of discounted estimated future net cash
    flows(a)

$
1,727,070


$
1,219,954


$
3,291,709     (a)
    
    Includes $494.5 million attributable to ENP in which there
    was a 53.2 percent noncontrolling interest as of
    December 31, 2009.    Year Ended December 31,2009


2008


2007(In thousands)Net change in prices and production costs

$
539,118


$
(2,848,387
)

$
1,718,818Purchases of
    minerals-in-place


191,573



14,155



1,249,008Sales of
    minerals-in-place


448







(300,727
)Extensions, discoveries, and improved recovery


113,043



171,509



282,163Revisions of previous quantity estimates


133,485



(474,926
)


21,887Production, net of production costs


(433,874
)


(321,935
)


(710,134
)Previously estimated development costs incurredduring the period


120,959



148,569



270,016Accretion of discount


121,995



329,171



146,181Change in estimated future development costs


(44,806
)


(176,732
)


(235,005
)Net change in income taxes


(223,560
)


991,368



(672,807
)Change in timing and other


(11,265
)


95,453



60,502Net change in standardized measure


507,116



(2,071,755
)


1,829,902Standardized measure, beginning of year


1,219,954



3,291,709



1,461,807Standardized measure, end of year

$
1,727,070


$
1,219,954


$
3,291,709  142




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  SUPPLEMENTARY
    INFORMATION  (Continued)
  Selected
    Quarterly Financial Data  Unaudited
    QuarterFirst

Second

Third

Fourth(In thousands, except per share data)2009Revenues

$
114,349


$
163,478


$
186,004


$
221,585Operating income (loss)

$
4,621


$
(74,609
)

$
30,733


$
(14,235
)Net loss attributable to EAC stockholders

$
(7,556
)

$
(46,975
)

$
(4,999
)

$
(21,605
)Net loss per common share:Basic

$
(0.15
)

$
(0.91
)

$
(0.10
)

$
(0.40
)Diluted

$
(0.15
)

$
(0.91
)

$
(0.10
)

$
(0.40
)2008Revenues

$
272,902


$
357,334


$
337,478


$
167,704Operating income (loss)

$
68,956


$
(55,925
)

$
375,148


$
407,781Net income (loss) attributable to EAC stockholders

$
31,220


$
(35,720
)

$
206,307


$
229,005Net income (loss) per common share:Basic

$
0.58


$
(0.68
)

$
3.88


$
4.35Diluted

$
0.58


$
(0.68
)

$
3.77


$
4.32   260-10
 143




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    ITEM 9A.
    CONTROLS
    AND PROCEDURES  Evaluation
    of Disclosure Controls and Procedures
  Rules 13a-15 15d-15,
  Managements
    Report on Internal Control Over Financial Reporting
       144




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                 Ernst &
    Young LLP
   
 145




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  Changes
    in Internal Control over Financial Reporting
    ITEM 9B.
    OTHER
    INFORMATION    PART III  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE  Directors
    and Executive Officers
    Name

Age

Position with EACI. Jon Brumley


70


Chairman of the BoardJon S. Brumley


39


Chief Executive Officer, President, and DirectorRobert C. Reeves


40


Senior Vice President, Chief Financial Officer, Treasurer, and
    Corporate SecretaryL. Ben Nivens


49


Senior Vice President and Chief Operating OfficerJohn W. Arms


42


Senior Vice President, AcquisitionsKevin Treadway


44


Senior Vice President, LandAndrea Hunter


35


Vice President, Controller, and Principal Accounting OfficerThomas H. Olle


55


Vice President, Strategic SolutionsAndy R. Lowe


58


Vice President, MarketingJohn A. Bailey


39


DirectorMartin C. Bowen


66


DirectorTed Collins, Jr.


71


DirectorTed A. Gardner


52


DirectorJohn V. Genova


55


DirectorJames A. Winne III


58


Director   Executive
    Officers
  I. Jon Brumley
  Jon S. Brumley
 146




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
    Robert C. Reeves
  L. Ben Nivens
  John W. Arms
  Kevin Treadway
  Andrea Hunter
 147




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
    Thomas H. Olle
  Andy R. Lowe
  Directors
  I. Jon Brumley.
  Jon S. Brumley.
  John A. Bailey
  Martin C. Bowen
 148




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
    Ted Collins, Jr.
  Ted A. Gardner
  John V. Genova
  James A. Winne III
 149




---



##### Table of Contents



ENCORE
    ACQUISITION COMPANY
    Director
    Independence
      
    Is a type of relationship addressed in Item 404 of
    Regulation S-K
    under the Exchange Act or Section 303A.02(b) of the NYSE
    Listed Company Manual, but those rules neither require
    disclosure nor preclude a determination of independence; or
    Consists of charitable contributions by EAC to an organization
    where a director is an executive officer and does not exceed the
    greater of $1 million or 2 percent of the
    organizations gross revenue in any of the last three years.    Board
    Committees
    Nominating andCorporateName

Audit


Compensation


Governance


Special Stock AwardI. Jon BrumleyJon S. Brumley














MemberJohn A. Bailey


MemberMartin C. Bowen






MemberTed Collins, Jr.






Member



ChairTed A. Gardner


ChairJohn V. Genova


MemberJames A. Winne III






Chair



Member    150




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ENCORE
    ACQUISITION COMPANY
  Audit Committee.
  
    the integrity of our financial statements;
    our compliance with legal and regulatory requirements;
    the independence, qualifications, and performance of our
    independent registered public accounting firm; and
    the performance of our internal audit function.  Regulation S-K.
  www.encoreacq.com
  Compensation Committee.
  
    review and approve corporate goals and objectives relevant to
    Chief Executive Officer compensation, evaluate the Chief
    Executive Officers performance in light of those goals and
    objectives, and, either as a committee or together with the
    other independent directors (as directed by the Board),
    determine and approve the Chief Executive Officers
    compensation level based on this evaluation;
    approve, or make recommendations to the Board with respect to,
    the compensation of other executive officers;
    from time to time consider and take action on the establishment
    of and changes to incentive compensation plans and equity-based
    compensation plans, including making recommendations to the
    Board on plans, goals, or amendments to be submitted for action
    by our stockholders;
    administer our compensation plans that it is assigned
    responsibility to administer, including taking action on grants
    and awards, determinations with respect to achievement of
    performance goals, and other matters provided in the respective
    plans;
    review from time to time when and as it deems appropriate the
    compensation and benefits of non-employee directors, including
    compensation pursuant to equity-based plans, and approve, or
    recommend to the Board for its action, any changes in such
    compensation and benefits; and
    produce a compensation committee report on executive
    compensation as required by the SEC to be included in our annual
    proxy statement or annual report on
    Form 10-K.      www.encoreacq.com
 151




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  Nominating and Corporate Governance
    Committee.
  
    identify individuals qualified to become Board members,
    consistent with criteria approved by the Board;
    recommend to the Board a slate of director nominees to be
    elected at the next annual meeting of stockholders and, when
    appropriate, director appointees to take office between annual
    meetings;
    develop and recommend to the Board the corporate governance
    guidelines applicable to EAC;
    oversee the Boards annual evaluation of its performance
    and that of management; and
    recommend to the Board membership on standing Board committees.    www.encoreacq.com
  Special Stock Award Committee.
  
    the Special Stock Award Committee may not make any award of
    shares of restricted stock to any officer or director of EAC who
    is subject to the provisions of Section 16 of the Exchange
    Act;
    the maximum number of shares of restricted stock that may be
    granted by the Special Stock Award Committee to one or more
    eligible employees may not exceed, in the aggregate,
    25,000 shares in any calendar year (which amount may be
    increased as to any calendar year by action of the Compensation
    Committee), and no unused portion of such authorized amount
    shall be carried forward to another calendar year; and
    after the initial grant of any award of shares of restricted
    stock by the Special Stock Award Committee, such award will then
    be administered by the Compensation Committee.  Code of
    Business Conduct and Ethics and Governance Guidelines
   152




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ENCORE
    ACQUISITION COMPANY
  www.encoreacq.com
  Executive
    Sessions of Non-Management Directors
    Stockholder
    Communications
    Section 16(a)
    Beneficial Ownership Reporting Compliance
    ITEM 11.
    EXECUTIVE
    COMPENSATION  Compensation
    Discussion and Analysis
    Proposed
    Merger with Denbury Resources Inc.
      
    35 percent above the closing sale price of EAC common stock
    on October 30, 2009 of $37.07 per share; 153




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ENCORE
    ACQUISITION COMPANY
   
    28 percent above the closing sale price of EAC common stock
    on October 5, 2009 (the 20th trading day prior to the
    date of the EAC board meeting) of $39.08 per share; and
    11 percent above the highest closing sale price of EAC
    common stock during the 52-week period ended October 30,
    2009 of $44.85 per share.    
    a cash bonus with respect to calendar year 2009 in an amount
    equal to the employees target annual cash incentive
    opportunity as determined by the Compensation Committee on
    February 9, 2009; and
    an equity compensation bonus with respect to calendar year 2009
    in an amount equal to the employees target annual equity
    incentive opportunity, with such equity compensation bonus to be
    paid solely in the form of restricted shares of EAC common
    stock, subject to the following terms and conditions:  
    vesting of the restricted shares will occur over such period of
    time, but in no event less than four years, and on such terms as
    the Compensation Committee determines at the time of grant;
    the restricted shares will not vest upon the occurrence of the
    merger with Denbury, but will convert into Denbury common stock
    based on the exchange ratio set forth in the merger
    agreement; and
    the restricted shares will vest immediately in full upon the
    termination of the employees employment by Denbury or an
    affiliate without cause or due to the
    employees resignation for good reason within
    the meaning of the our Employee Severance Protection Plan.      Executive
    Compensation Philosophy
    
    base salaries should be at levels competitive with peer group
    companies that compete with us for business opportunities and
    executive talent;
    annual cash bonuses and equity-based compensation awards should
    reflect progress toward our corporate, strategic, and operating
    goals as well as individual performance; and
    we should encourage significant executive stock ownership to
    further align executives interests with those of our
    stockholders. 154




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
   Purpose
    of the Executive Compensation Program
    
    align executive pay with the creation of stockholder wealth
    while maintaining good corporate governance;
    produce long-term, positive results for our stockholders;
    align executive compensation with our performance and
    appropriate peer group companies;
    offer incentives for exceeding performance objectives;
    provide market-competitive compensation and benefits that will
    enable us to attract, motivate, and retain a talented
    workforce; and
    prevent short-term inappropriate behavior to manipulate results
    for the purpose of increasing compensation.  Role
    of the Compensation Committee
  Responsibilities
    and Authority
  www.encoreacq.com
  Timing
    of Decisions
      Compensation
    Program
  Elements
    of Compensation
    
    base salary; 155




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
   
    annual incentive compensation, which includes an annual cash
    bonus and long-term incentive compensation; and
    perquisites and other benefits.  Base
    Salaries
    Annual
    Incentive Compensation
  General.
  
    25 percent annual cash bonus;
    50 percent restricted stock; and
    25 percent stock options.      Annual Cash Bonuses.
  
    match company and individual performance;
    increase shareholder wealth and compensate employees fairly;
    increase employee effectiveness by directly linking compensation
    to defined goals and objectives;
    create well-defined, measurable, and attainable objectives for
    members of the strategic team; and
    give members of the strategic team more knowledge of their
    individual goals, their group regional goals, and our corporate
    objectives.     156




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
    Name

Target 2009 Bonus OpportunityJon S. Brumley


250
%I. Jon Brumley


200
%L. Ben Nivens


200
%Robert C. Reeves


175
%John W. Arms


125
%     
    meet budgeted production volumes;
    achieve negative forecast revisions for proved developed
    producing properties of one percent or less;
    generate at least $150 million of free cash flow;
    achieve development costs of $22 per Bbl or less; and
    generate a 15 percent rate of return based on constant oil
    and natural gas prices.        Target 2009 Bonus


Total Annual Cash


Total Annual Cash


Increase in 2009Name

Opportunity


Bonus for 2009


Bonus for 2008


Compared to 2008I. Jon Brumley

$
772,600


$
772,600


$
439,900


$
332,700Jon S. Brumley


1,545,000



1,545,000



791,900



753,100Robert C. Reeves


648,900



648,900



372,700



276,200L. Ben Nivens


741,600



741,600



369,500



372,100John W. Arms


418,500



418,500



302,800



115,700   Restricted Stock Awards.
 157




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
      Name

Shares of Restricted Stock


Grant Date Fair Value(a)I. Jon Brumley


47,564


$
2,317,794Jon S. Brumley


95,116



4,635,003Robert C. Reeves


39,949



1,946,715L. Ben Nivens


45,656



2,224,817John W. Arms


25,764



1,255,480     (a)
    
    Determined by multiplying the number of shares of restricted
    stock granted to a named executive officer by the strike price,
    the closing price of our common stock on the NYSE on
    February 8, 2010, which was the date of grant.    
    Time-based vesting component:  restricted stock
    awards vest in four equal annual installments beginning on the
    first anniversary of the date of grant.
    Performance-based vesting
    component:  restricted stock awards vest if we (or
    our successor) achieve any one of the following performance
    goals during 2010:  
    aggregate annual production of oil and natural gas meets or
    exceeds 15.6 MMBOE, as adjusted for divestitures;
    proved developed producing reserves as of December 31, 2009
    should not have negative forecast revisions in excess of one
    percent;
    the development cost per Bbl of oil should not exceed $22.00;
    EBITDAX (earnings before interest, income taxes, depletion,
    depreciation, amortization, and exploration costs) should be at
    least $534 million;
    EBITDAX per BOE should be at least 60 percent of wellhead
    revenues; or
    proved oil and natural gas reserves at December 31, 2010
    should be greater than 220.3 MMBOE using the price in our
    Miller and Lents Reserve Report as of December 31, 2009, as
    adjusted for divestitures.    Stock Options.
 158




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
    Special
    Bonus
    Perquisites
    and Other Benefits
  Perquisites.
    Other Benefits.
  Post-Employment
    Benefits
    
    cash equal to 2 to 3 times annual salary and cash bonus;
    continued medical, dental, and life insurance coverage for up to
    three years;
    automatic vesting of all stock options and restricted
    stock; and
    an additional amount to gross up the amount, if any,
    of excise tax payable by the officer under the golden parachute
    provisions of the Code such that after payment of excise and
    income taxes on the gross up payment, the officer will retain an
    amount sufficient to cover the excise tax.    Stock
    Ownership Guidelines
   159




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
    Impact
    of Tax Treatment
    Compensation
    Committee Report
  Form 10-K. Form 10-K.
  The information contained in this report shall not be deemed
    to be soliciting material or filed or
    incorporated by reference in future filings with the SEC, or
    subject to the liabilities of Section 18 of the Exchange
    Act, except to the extent that EAC specifically incorporates it
    by reference into a document filed under the Securities Act of
    1933 or the Exchange Act.
       160




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
   Summary
    Compensation Table
    Change in PensionValue andNonqualifiedStock Awards(a)


Option


Non-Equity


Deferred


All OtherEAC Restricted





Awards(b)


Incentive Plan


Compensation


Compensation(d)Name and Title

Year


Salary


Cash Bonus


Stock(b)


ENP MIUs


(c)


Compensation


Earnings


(e)


TotalI. Jon Brumley


2009


$
384,417


$
772,600


$
879,871


$



$
439,945


$



$



$
34,057


$
2,510,890Chairman of the Board


2008



370,833



439,900







1,236,785















46,856



2,094,3742007



350,000



700,000



1,968,626



1,769,074



26,271











19,688



4,833,659Jon S. Brumley


2009



615,000



1,545,000



1,016,809







512,501











22,050



3,711,360Chief Executive Officer


2008



591,667



791,900



715,725



1,236,785



227,234











41,544



3,604,855and President


2007



537,500



850,000



1,040,528



1,769,074



535,732











19,688



4,752,522Robert C. Reeves


2009



369,000



648,900



423,692







229,481











22,050



1,693,123Senior Vice President,


2008



351,667



372,700



219,411



951,373



103,516











20,700



2,019,367Chief Financial Officer,


2007



295,833



550,000



304,680



1,360,826



163,483











19,688



2,694,510Treasurer, and Corporate SecretaryL. Ben Nivens


2009



369,000



741,600



391,144







219,757











22,050



1,743,551Senior Vice President


2008



349,167



369,500



153,012



665,961



77,698











20,700



1,636,038and Chief Operating


2007



287,500



550,000



218,911



952,578



110,250











19,688



2,138,927OfficerJohn W. Arms


2009



333,167



418,500



340,842







184,936











22,050



1,299,495Senior Vice President,


2008



312,500



302,800



172,227



665,961



76,637











20,700



1,550,825Acquisitions


2007



241,667



475,000



232,084



952,578



126,599











19,688



2,047,616     (a)
    
    Reflects the compensation cost recognized by us with respect to
    grants of restricted stock awards and management incentive
    units, which does not correspond to the actual value that may be
    realized by the named executive officers. Pursuant to SEC rules,
    the amounts shown exclude the impact of estimated forfeitures
    related to service-based vesting conditions.(b)
    
    During 2008, our named executive officers did not receive any
    grants of restricted stock or stock options with respect to
    performance in 2007 because, as named executive officers of
    ENPs general partner, they received a grant of management
    incentive units in May 2007.(c)
    
    This amount reflects the compensation cost recognized by us with
    respect to grants of stock options. Pursuant to SEC rules, the
    amounts shown exclude the impact of estimated forfeitures
    related to service-based vesting conditions. The grant date fair
    value of each option was estimated utilizing the Black-Scholes
    option-pricing model using the following assumptions:  Year Ended December 31,2009

2007

2006

2005Expected volatility


51.9
%


35.7
%


42.8
%


46.0
%Expected dividend yield


0.0
%


0.0
%


0.0
%


0.0
%Expected term (in years)


6.25



6.0



6.0



6.0Risk-free interest rate


2.1
%


4.8
%


4.6
%


3.7
%Weighted-average grant-date fair value per share

$
15.81


$
11.16


$
14.96


$
12.99     (d)
    
    Includes matching contributions to our 401(k) plan of $22,050,
    $20,700, and $19,688, for each named executive officer in 2009,
    2008, and 2007, respectively.(e)
    
    For I. Jon Brumley, includes $12,007 and $26,156 related to
    personal use of our aircraft during 2009 and 2008, respectively.
    For Jon S. Brumley, includes $20,844 related to personal use of
    our aircraft during 2008. 161




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ENCORE
    ACQUISITION COMPANY
  Grants of
    Plan-Based Awards for 2009
    Estimated Future Payouts Under


All Other OptionEquity Incentive Plan Awards


Awards: Number


Exercise or Base


Grant Date FairThreshold


Target


Maximum


of Securities


Price of Option


Value of AwardsName

Grant Date


(#)


(#)


(#)


Underlying


Awards


(a)I. Jon Brumley


2/9/2009







28,801







27,827


$
30.55


$
1,319,816Jon S. Brumley


2/9/2009







51,842







50,088



30.55



2,375,664Robert C. Reeves


2/9/2009







24,396







23,571



30.55



1,117,956L. Ben Nivens


2/9/2009







24,193







23,374



30.55



1,108,639John W. Arms


2/9/2009







19,822







19,151



30.55



908,339     (a)
    
    The grant date fair value of each EAC restricted stock and
    option award is as follows:  Total Reflected inGrant Date FairName

Restricted Stock

Shares Options

Value ColumnI. Jon Brumley

$
879,871


$
439,945


$
1,319,816Jon S. Brumley


1,583,773



791,891



2,375,664Robert C. Reeves


745,298



372,658



1,117,956L. Ben Nivens


739,096



369,543



1,108,639John W. Arms


605,562



302,777



908,339     
    Time-based vesting component:  restricted stock
    awards vest in four equal annual installments beginning on the
    first anniversary of the date of grant.
    Performance-based vesting
    component:  restricted stock awards vest if we
    achieve any one of the following performance goals during 2010:               162




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ENCORE
    ACQUISITION COMPANY
  Outstanding
    Equity Awards at December 31, 2009
    Stock Awards(a)EquityIncentive PlanAwards:Market orPayout ValueEquity Incentive


of UnearnedNumber of


Market Value


Plan Awards:


Shares, UnitsOption Awards(a)(b)


Shares or


of Shares or


Number of Unearned


or OtherNumber of Securities








Units of Stock


Units of Stock


Shares, Units or


Rights ThatUnderlying Unexercised Options


Option Exercise


Option


That Have


That Have


Other Rights That


Have NotName and Title

Grant Date


Exercisable


Unexercisable


Price


Expiration Date


Not Vested(c)


Not Vested(d)


Have Not Vested(c)


Vested(d)I. Jon Brumley


03/08/2001



44,357






$
9.3333



03/08/2011



N/A



N/A



N/A



N/AChairman of the Board


10/23/2001



60,000







8.4000



10/23/2011



N/A



N/A



N/A



N/A11/22/2002



130,644







12.4000



11/22/2012



N/A



N/A



N/A



N/A02/10/2004



93,361







17.1733



02/10/2014



N/A



N/A



N/A



N/A02/14/2005



















26,375


$
1,266,528



N/A



N/A02/15/2006



















16,881



810,626



N/A



N/A02/12/2007



















24,776



1,189,744



N/A



N/A02/09/2009







27,827



30.5500



02/09/2019



28,801



1,383,024



N/A



N/AJon S. Brumley


03/08/2001



68,500






$
9.3333



03/08/2011



N/A



N/A



N/A



N/AChief Executive Officer


10/23/2001



60,000







8.4000



10/23/2011



N/A



N/A



N/A



N/Aand President


11/22/2002



58,065







12.4000



11/22/2012



N/A



N/A



N/A



N/A02/10/2004



68,464







17.1733



02/10/2014



N/A



N/A



N/A



N/A02/14/2005



30,269







26.5467



02/14/2015



11,300


$
542,626



N/A



N/A02/15/2006



29,949







31.1000



02/15/2016



8,440



405,289



N/A



N/A02/12/2007



28,376



14,187



25.7300



02/12/2017



18,460



886,449



N/A



N/A02/09/2009







50,088



30.5500



02/09/2019



51,842



2,489,453



N/A



N/ARobert C. Reeves


03/08/2001



10,179






$
9.3333



03/08/2011



N/A



N/A



N/A



N/ASenior Vice President,


10/23/2001



30,000







8.4000



10/23/2011



N/A



N/A



N/A



N/AChief Financial Officer,


11/22/2002



15,483







12.4000



11/22/2012



N/A



N/A



N/A



N/ATreasurer, and


02/10/2004



12,448







17.1733



02/10/2014



N/A



N/A



N/A



N/ACorporate Secretary


02/14/2005



5,040







26.5467



02/14/2015



1,885


$
90,518



N/A



N/A02/15/2006



5,134







31.1000



02/15/2016



1,447



69,485



N/A



N/A02/12/2007



12,694



6,347



25.7300



02/12/2017



8,258



396,549



N/A



N/A02/09/2009







23,571



30.5500



02/09/2019



24,396



1,171,496



N/A



N/AL. Ben Nivens


11/22/2002



296






$
12.4000



11/22/2012



N/A



N/A



N/A



N/ASenior Vice President


11/21/2003



809







13.6067



11/21/2013



N/A



N/A



N/A



N/Aand Chief Operating


02/14/2005



642







26.5467



02/14/2015



479


$
23,002



N/A



N/AOfficer


02/15/2006



5,705







31.1000



02/15/2016



1,607



77,168



N/A



N/A02/12/2007



8,960



4,481



25.7300



02/12/2017



5,830



279,957



N/A



N/A02/09/2009







23,374



30.5500



02/09/2019



24,193



1,161,748



N/A



N/AJohn W. Arms


03/08/2001



13,125






$
9.3333



03/08/2011



N/A



N/A



N/A



N/ASenior Vice President,


10/23/2001



8,475







8.4000



10/23/2011



N/A



N/A



N/A



N/AAcquisitions


11/22/2002



7,741







12.4000



11/22/2012



N/A



N/A



N/A



N/A02/10/2004



4,979







17.1733



02/10/2014



N/A



N/A



N/A



N/A02/14/2005



5,040







26.5467



02/14/2015



1,885


$
90,518



N/A



N/A02/15/2006



4,849







31.1000



02/15/2016



1,366



65,595



N/A



N/A02/12/2007



8,960



4,481



25.7300



02/12/2017



5,830



279,957



N/A



N/A02/09/2009







19,151



30.5500



02/09/2019



19,822



951,852



N/A



N/A     (a)
    
    Grants prior to 2006 have been adjusted to reflect EACs
    three-for-two
    stock split in July 2005.(b)
    
    EAC stock options vest and become exercisable in three equal
    annual installments beginning on the first anniversary of the
    grant date.(c)
    
    EAC restricted stock awards granted prior to 2005 vest in three
    equal annual installments beginning on the third anniversary of
    the grant date. EAC restricted stock awards granted subsequent
    to 2005 vest in four equal annual installments beginning on the
    first anniversary of the grant date. All EAC restricted stock
    awards are subject to forfeiture if certain performance
    objectives are not satisfied and to accelerated vesting in the
    event of a change in control or termination of employment due to
    death or disability and to such other terms as are set forth in
    the award agreement. Holders of EAC restricted stock have the
    right to vote and to receive dividends paid with respect to
    shares of restricted stock.(d)
    
    Calculated using the closing price of our common stock on the
    NYSE on December 31, 2009 of $48.02 per share. 163




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
   Option
    Exercises and Stock Vested
    Option Awards


Stock AwardsNumber of Shares





Number of SharesAcquired on


Value Realized on


Acquired on Vesting


Value Realized onName

Exercise


Exercise


(a)


Vesting(b)I. Jon Brumley





$




69,784


$
1,868,246Jon S. Brumley










34,156



906,622Robert C. Reeves










8,404



220,299L. Ben Nivens










5,002



129,180John W. Arms










6,543



170,884     (a)
    
    Represents shares of restricted stock that vested on various
    dates during 2009.(b)
    
    Determined by multiplying the number of shares of restricted
    stock by the closing price on the NYSE of EACs common
    stock on the vesting date.  Pension
    Benefits
    Non-Qualified
    Deferred Compensation
    Potential
    Payments Upon Termination or Change in Control
  Cash
    Severance
  case-by-case
  Stock
    Options and Restricted Stock Awards
    Termination other than upon Normal Retirement, Change in
    Control, Death, or Disability.
  Termination upon Normal Retirement.
 164




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ENCORE
    ACQUISITION COMPANY
  Termination upon Change in Control.
  Termination upon Death or Disability.
  Change
    in Control
    
    cash equal to 2 to 3 times annual salary and bonus;
    continued medical, dental, and life insurance coverage for up to
    three years;
    automatic vesting of all stock options and restricted
    stock; and
    an additional amount to gross up the amount, if any,
    of excise tax payable by the officer under the golden parachute
    provisions of the Code such that after payment of excise and
    income taxes on the gross up payment, the officer will retain an
    amount sufficient to cover the excise tax.     165




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ENCORE
    ACQUISITION COMPANY
  Potential
    Payments
  Change in Control.
  I. Jon Brumley


Jon S. Brumley


Robert C. Reeves


L. Ben Nivens


John W. ArmsCash severance

$
2,317,800


$
5,407,500


$
2,039,400


$
2,224,800


$
1,506,600Insurance coverage


66,104



67,603



67,603



31,265



67,231Stock options(a)


486,138



1,191,266



553,260



508,225



434,449Restricted stock(b)


4,698,904



4,351,321



1,736,393



1,547,574



1,394,412Tax gross up






2,293,860



903,506



994,027



677,790Total

$
7,568,946


$
13,311,550


$
5,300,162


$
5,305,891


$
4,080,482     (a)
    
    Option awards will automatically vest upon a change in control
    even without a termination of employment. Under EACs
    incentive stock plans, stock options will be cashed out in the
    event of a change in control at their fair value on the date the
    event occurs. Accordingly, these amounts have been calculated by
    multiplying the number of previously unvested stock options by
    the difference between $48.02 per share, the closing price of
    EACs common stock on the NYSE on December 31, 2009,
    and the exercise price of the previously unvested stock options.
    Amounts which would be payable with respect to vested options
    are not included in the table.(b)
    
    Restricted stock awards will automatically vest upon a change in
    control even without a termination of employment. Restricted
    stock awards under EACs 2000 Incentive Stock Plan will be
    cashed out in the event of a change in control at the highest
    closing price per share paid for our stock within the
    60 days prior to the change in control. Accordingly, the
    payment on a change in control for awards under the 2000
    Incentive Stock Plan has been calculated by multiplying the
    number of previously unvested shares of restricted stock by
    $48.74 per share, which was the highest closing price paid for
    EACs common stock on the NYSE in the 60 days prior to
    December 31, 2009.  Death, Disability, or Other Termination of
    Employment.
  I. Jon Brumley


Jon S. Brumley


Robert C. Reeves


L. Ben Nivens


John W. ArmsDeath(a)(c)

$
5,136,058


$
5,515,082


$
2,281,308


$
2,050,099


$
1,822,324Disability(b)(c)


486,138



1,191,266



553,260



508,225



434,449Any other termination


















     (a)
    
    Reflects the automatic vesting of EAC stock options and
    restricted stock.(b)
    
    Reflects the automatic vesting of EAC stock options.(c)
    
    With respect to stock options, the payment is determined by
    multiplying the number of unvested stock options by the
    difference between $48.02 per share, the closing price of
    EACs common stock on the NYSE on December 31, 2009,
    and the exercise price of the previously unvested stock options.
    With respect to restricted stock, the payment is determined by
    multiplying the number of unvested shares of restricted stock by
    $48.02 per share, the closing price of EACs common stock
    on the NYSE on December 31, 2009.   166




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ENCORE
    ACQUISITION COMPANY
  Compensation
    Committee Interlocks and Insider Participation
    Director
    Compensation
      Change in PensionValue andNonqualifiedNon-Equity


DeferredFees Earned or








Incentive Plan


Compensation


All OtherName

Paid in Cash(a)


Stock Awards(b)


Option Awards


Compensation


Earnings


Compensation


Total(c)John A. Bailey

$
82,000


$
145,600


$



$



$



$



$
227,600Martin C. Bowen


71,000



145,600



















216,600Ted Collins, Jr.


86,000



145,600



















231,600Ted A. Gardner


92,000



145,600



















237,600John V. Genova


82,000



145,600



















227,600James A. Winne III


86,000



145,600



















231,600     (a)
    
    Directors receive an annual retainer of $50,000 plus additional
    fees of $2,000 for attendance at each Board meeting and $1,000
    for attendance at each committee meeting. The chair of each
    committee receives an additional annual fee of $10,000.(b)
    
    Directors receive an annual grant of 5,000 shares of
    restricted stock under our long-term incentive plan. Amount is
    determined by multiplying the number of shares of restricted
    stock granted by $29.12, the closing price of our common stock
    on the NYSE on April 28, 2009, which was the date of grant.
    Shares of restricted stock vest in four equal annual
    installments beginning on the first anniversary of the grant
    date, subject to immediate vesting in the event of a change in
    control or termination of employment due to death or disability
    and to such other terms as are set forth in the award agreement.(c)
    
    We also reimburse directors for
    out-of-pocket
    expenses attendant to Board membership. These amounts are
    excluded from the above table.  ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS    
    each person known by us to beneficially own more than
    5 percent of our outstanding common stock;
    each member of the board of directors;
    each of our named executive officers; and
    all of our directors and executive officers as a group.   167




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ENCORE
    ACQUISITION COMPANY
  Shares BeneficiallyName and Address of Beneficial Owner

Owned


Percent of Class5% Beneficial OwnersBaron Capital Group, Inc.(c)
    767 Fifth Avenue, 49th Floor
    New York, New York 10153


3,706,707



6.6
%BlackRock, Inc.(d)
    40 East 52nd Street
    New York, New York 10022


2,962,343



5.3
%Directors and Named Executive Officers(a)(b)I. Jon Brumley(e)


2,615,105



4.6
%Jon S. Brumley


1,087,115



1.9
%Robert C. Reeves


221,512




*L. Ben Nivens


122,528




*John W. Arms


152,442




*John A. Bailey


20,000




*Martin C. Bowen


42,000




*Ted Collins, Jr.


147,750




*Ted A. Gardner


34,500




*John V. Genova


34,500




*James A. Winne III


42,500




*All directors and executive officers as a group (15 persons)


4,868,454



8.5
%     *
    
    Less than 1%.(a)
    
    Includes options that are or become exercisable within
    60 days of February 17, 2010 as follows: Mr. I.
    Jon Brumley (337,638), Mr. Jon S. Brumley (374,506),
    Mr. Reeves (105,182), Mr. Nivens (28,685),
    Mr. Arms (64,034), Mr. Bowen (7,500), Mr. Collins
    (18,000), Mr. Gardner (15,000), Mr. Genova (7,500),
    and Mr. Winne (18,000), and all directors and executive
    officers as a group (1,167,748).(b)
    
    Includes unvested restricted stock as of February 17, 2010
    as follows: Mr. I. Jon Brumley (81,552), Mr. Jon S.
    Brumley (143,227), Mr. Reeves (62,375), Mr. Nivens
    (66,715), Mr. Arms (43,545), Mr. Bailey (12,500),
    Mr. Bowen (14,000), Mr. Collins (14,000),
    Mr. Gardner (14,000), Mr. Genova (14,000), and
    Mr. Winne (14,000), and all directors and executive
    officers as a group (568,500).(c)
    
    Based on an amendment to Schedule 13G filed with the SEC on
    February 8, 2010 by Baron Capital Group, Inc.
    (BCG), BAMCO, Inc., an investment advisor
    (BAMCO), Baron Capital Management, Inc., an
    investment advisor (BCM), Baron Growth Fund, a
    registered investment company (BGF), and Ronald
    Baron. Such filing indicated: (1) BCG had shared voting
    power with respect to 3,251,207 shares and shared
    dispositive power with respect to 3,706,707 shares;
    (2) BAMCO had shared voting power with respect to
    3,251,493 shares and shared dispositive power with respect
    to 3,479,100 shares; (3) BCM had shared voting power
    with respect to 217,107 shares and shared dispositive power
    with respect to 227,607 shares; (4) BGF had shared
    voting and dispositive power with respect to
    2,800,000 shares; and (5) Ronald Baron had shared
    voting power with respect to 3,251,207 shares and shared
    dispositive power with respect to 3,706,707 shares. BAMCO
    and BCM are subsidiaries of BCG. BGF is an advisory client of
    BAMCO. Ronald Baron owns a controlling interest in BCG. By
    virtue of investment advisory agreements with their respective
    clients, BAMCO and BCM have been given the discretion to dispose
    or to direct the disposition of the securities in the advisory
    accounts. BCG and Ronald Baron disclaim beneficial ownership of
    shares held by their controlled entities (or the investment
    advisory clients thereof) to the extent such shares are held by
    persons other than BCG and Ronald Baron. BAMCO and BCM disclaim 168




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ENCORE
    ACQUISITION COMPANY
  beneficial ownership of shares held by their investment advisory
    clients to the extent such shares are held by persons other than
    BAMCO, BCM, and their affiliates.(d)
    
    Based on an amendment to Schedule 13G filed with the SEC on
    December 14, 2009 by BlackRock, Inc.
    (BlackRock). Such filing indicated that BlackRock
    had sole voting and dispositive power with respect to
    2,962,343 shares.(e)
    
    Mr. Brumley is the sole officer, director, and stockholder
    of a corporation that is the sole general partner of two limited
    partnerships that own a total of 1,945,013 shares.
    Accordingly, Mr. Brumley had sole voting and dispositive
    power with respect to all shares owned by these partnerships.    (a)


(b)


(c)Number of SecuritiesNumber of





Remaining AvailableSecurities to Be





for Future IssuanceIssued upon


Weighted-Average


Under EquityExercise of


Exercise Price of


Compensation PlansOutstanding


Outstanding


(Excluding SecuritiesOptions, Warrants


Options, Warrants


Reflected inand Rights(a)


and Rights


Column (a))Equity compensation plans approved by security holders


1,729,591


$
19.84



1,717,787Equity compensation plans not approved by security holders





$




Total


1,729,591


$
19.84



1,717,787     (a)
    
    There are no outstanding warrants or equity rights awarded under
    our equity compensation plans. Excludes 920,122 shares of
    unvested restricted stock.    ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE  Policies
    and Procedures for Approval of Related Person
    Transactions
    
    EAC is a participant;
    any related person has a direct or indirect material
    interest; and
    the amount involved exceeds $120,000, but excludes any
    transaction that does not require disclosure under
    Item 404(a) of
    Regulation S-K.    Director
    Independence
   169




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ENCORE
    ACQUISITION COMPANY
  ITEM 14.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES    Fees
    Incurred by Us for Services Provided by Ernst & Young
    LLP
    2009


2008Audit fees(a)

$
2,117,795


$
1,524,531Audit-related fees






Tax fees






All other fees(b)


1,995



6,000Total

$
2,119,790


$
1,530,531     (a)
    
    Represent fees for professional services provided in connection
    with: (1) the annual audit of our consolidated financial
    statements; (2) the annual audit of our internal control
    over financial reporting; (3) the review of our quarterly
    consolidated financial statements; and (4) audit services
    provided in connection with SEC filings, including comfort
    letters, consents, and comment letters. Includes ENP audit fees
    of $1,038,847 and $868,471 during 2009 and 2008, respectively.(b)
    
    Consists of amounts paid for access to EY/Online, an
    Internet-based resource for accounting and auditing matters.  Audit
    Committees Pre-Approval Policy and Procedures
       170




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ENCORE
    ACQUISITION COMPANY
  PART IV  ITEM 15.
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES  (a)
    The following documents are filed as a part of this Report:    PageReport of Independent Registered Public Accounting Firm


77Consolidated Balance Sheets as of December 31, 2009 and 2008


78Consolidated Statements of Operations for the Years Ended
    December 31, 2009, 2008, and 2007


79Consolidated Statements of Equity and Comprehensive Income
    (Loss) for the Years Ended December 31, 2009, 2008, and 2007


80Consolidated Statements of Cash Flows for the Years Ended
    December 31, 2009, 2008, and 2007


81Notes to Consolidated Financial Statements


82        171




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ENCORE
    ACQUISITION COMPANY
  ExhibitNo.

Description2
.1

Agreement and Plan of Merger dated as of October 31, 2009
    by and between Encore Acquisition Company and Denbury Resources
    Inc. (incorporated by reference from Exhibit 2.1 to
    EACs Current Report on
    Form 8-K,
    filed with the SEC on November 3, 2009).3
.1

Second Amended and Restated Certificate of Incorporation of
    Encore Acquisition Company EAC (incorporated by reference from
    Exhibit 3.1 to EACs Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2001, filed with the
    SEC on November 7, 2001).3
.1.2

Certificate of Amendment to Second Amended and Restated
    Certificate of Incorporation of Encore Acquisition Company
    (incorporated by reference from Exhibit 3.1.2 to EACs
    Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2005, filed with the SEC on
    May 5, 2005).3
.1.3

Certificate of Designations of Series A Junior
    Participating Preferred Stock of Encore Acquisition Company
    (incorporated by reference from Exhibit 3.1 to EACs
    Current Report on
    Form 8-K,
    filed with the SEC on October 31, 2008).3
.2

Second Amended and Restated Bylaws of Encore Acquisition Company
    (incorporated by reference from EACs Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2001, filed with the
    SEC on November 7, 2001).4
.1

Specimen certificate of Encore Acquisition Company (incorporated
    by referenced from Exhibit 4.1 to EACs Registration
    Statement on
    Form S-1,
    Registration
    No. 333-47540,
    filed with the SEC on December 15, 2000).4
.2.1

Indenture, dated as of April 2, 2004, among Encore
    Acquisition Company, the subsidiary guarantors party thereto and
    Wells Fargo Bank, National Association, with respect to the
    6.25% Senior Subordinated Notes due 2014 (incorporated by
    reference from Exhibit 4.1 of EACs Registration
    Statement on
    Form S-4
    (Registration
    No. 333-117025)
    filed with the SEC on June 30, 2004).4
.2.2

Form of 6.25% Senior Subordinated Note to Cede &
    Co. or its registered assigns (included as Exhibit A to
    Exhibit 4.2.1 above).4
.2.3

First Supplemental Indenture, dated as of January 2, 2008,
    among Encore Acquisition Company, the subsidiary guarantors
    party thereto and Wells Fargo Bank, National Association, with
    respect to the 6.25% Senior Subordinated Notes due 2014
    (incorporated by reference from Exhibit 4.2.3 to EACs
    Annual Report on
    Form 10-K
    for the year ended December 31, 2007, filed with the SEC on
    February 28, 2008).4
.3.1

Indenture, dated as of July 13, 2005, among Encore
    Acquisition Company, the subsidiary guarantors party thereto and
    Wells Fargo Bank, National Association, with respect to the
    6.0% Senior Subordinated Notes due 2015 (incorporated by
    reference from Exhibit 4.1 to EACs Current Report on
    Form 8-K,
    filed with the SEC on July 14, 2005).4
.3.2

Form of 6.0% Senior Subordinated Note due 2015 (included as
    Exhibit A to Exhibit 4.3.1 above).4
.3.3

First Supplemental Indenture, dated as of January 2, 2008,
    among Encore Acquisition Company, the subsidiary guarantors
    party thereto and Wells Fargo Bank, National Association, with
    respect to the 6.0% Senior Subordinated Notes due 2015
    (incorporated by reference from Exhibit 4.3.3 to EACs
    Annual Report on
    Form 10-K
    for the year ended December 31, 2007, filed with the SEC on
    February 28, 2008).4
.4.1

Indenture, dated as of November 16, 2005, among Encore
    Acquisition Company, the subsidiary guarantors party thereto and
    Wells Fargo Bank, National Association with respect to
    Subordinated Debt Securities (incorporated by reference from
    Exhibit 4.1 to EACs Current Report on
    Form 8-K,
    filed with the SEC on November 23, 2005).4
.4.2

First Supplemental Indenture, dated as of November 16,
    2005, among Encore Acquisition Company, the subsidiary
    guarantors party thereto and Wells Fargo Bank, National
    Association, with respect to the 7.25% Senior Subordinated
    Notes due 2017 (incorporated by reference from Exhibit 4.2
    to EACs Current Report on
    Form 8-K,
    filed with the SEC on November 23, 2005).4
.4.3

Form of 7.25% Senior Subordinated Note due 2017 (included
    as Exhibit A to Exhibit 4.4.2 above). 172




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ENCORE
    ACQUISITION COMPANY
  ExhibitNo.

Description4
.4.4

Second Supplemental Indenture, dated as of January 2, 2008,
    among Encore Acquisition Company, the subsidiary guarantors
    party thereto and Wells Fargo Bank, National Association, with
    respect to the 7.25% Senior Subordinated Notes due 2017
    (incorporated by reference from Exhibit 4.4.4 to EACs
    Annual Report on
    Form 10-K
    for the year ended December 31, 2007, filed with the SEC on
    February 28, 2008).4
.4.5

Third Supplemental Indenture, dated as of April 27, 2009,
    among Encore Acquisition Company, the subsidiary guarantors
    party thereto, and Wells Fargo Bank, National Association, with
    respect to the 9.50% Senior Subordinated Notes due 2016
    (incorporated by reference from Exhibit 4.2 to EACs
    Current Report on
    Form 8-K,
    filed with the SEC on April 28, 2009).4
.4.6

Form of 9.50% Senior Subordinated Note due 2016 (included
    as Exhibit A to Exhibit 4.4.5 above).4
.5

Rights Agreement dated as of October 28, 2008 between
    Encore Acquisition Company and BNY Mellon Shareowner Services,
    LLC, as Rights Agent (incorporated by reference from
    Exhibit 4.1 to EACs Current Report on
    Form 8-K,
    filed with the SEC on October 31, 2008).4
.5.1

First Amendment to Rights Agreement date as of October 31,
    2009 between Encore Acquisition Company and BNY Mellon
    Shareowner Services, LLC, as Rights Agent (incorporated by
    reference from Exhibit 4.1 to EACs Current Report on
    Form 8-K,
    filed with the SEC on November 3, 2009).10
.1+

2000 Incentive Stock Plan (incorporated by reference from
    Exhibit 4.1 to EACs Registration Statement on
    Form S-8
    (File
    No. 333-120422),
    filed with the SEC on November 12, 2004).10
.2+

2008 Incentive Stock Plan (incorporated by reference from
    Exhibit 4.5 to EACs Registration Statement on
    Form S-8
    (File
    No. 333-151323),
    filed with the SEC on May 30, 2008).10
.3+

Encore Acquisition Company Employee Severance Protection Plan
    (incorporated by reference from Exhibit 10.1 to EACs
    Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2009, filed with the
    SEC on November 2, 2009).10
.4+

First Amendment to Encore Acquisition Company Employee Severance
    Protection Plan (As Amended and Restated Effective May 6,
    2008), dated as of September 29, 2009 (incorporated by
    reference from Exhibit 10.2 to EACs Quarterly Report
    on
    Form 10-Q
    for the quarter ended September 30, 2009, filed with the
    SEC on November 2, 2009).10
.5+

Form of Stock Option Agreement  Nonqualified
    (incorporated by reference from Exhibit 10.2 to EACs
    Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2009, filed with the SEC on
    May 6, 2009).10
.6+

Form of Stock Option Agreement  Incentive
    (incorporated by reference from Exhibit 10.3 to EACs
    Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2009, filed with the SEC on
    May 6, 2009).10
.7+

Form of Restricted Stock Agreement  Executive
    (incorporated by reference from Exhibit 10.4 to EACs
    Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2009, filed with the SEC on
    May 6, 2009).10
.8+

Form of Indemnification Agreement for directors and executive
    officers (incorporated by reference from Exhibit 10.6 of
    EACs Annual Report on
    Form 10-K
    for the year ended December 31, 2004, filed with the SEC on
    March 10, 2005).10
.9

Description of Compensation Payable to Non-Management Directors
    (incorporated by reference from Exhibit 10.1 of EACs
    Current Report on
    Form 8-K,
    filed with the SEC on February 22, 2006).10
.10

Amended and Restated Credit Agreement dated as of March 7,
    2007 by and among Encore Acquisition Company, Encore Operating,
    L.P., Bank of America, N.A., as administrative agent and L/C
    Issuer, Fortis Capital Corp. and Wachovia Bank, N.A., as
    co-syndication agents, BNP Paribas and Calyon New York Branch,
    as co-documentation agents, Banc of America Securities LLC, as
    sole lead arranger and sole book manager, and other lenders
    party thereto (incorporated by reference from Exhibit 10.1
    to EACs Current Report on
    Form 8-K,
    filed with the SEC on March 13, 2007).10
.11

First Amendment to Amended and Restated Credit Agreement, dated
    as of January 31, 2008, by and among Encore Acquisition
    Company, Encore Operating, L.P., Bank of America, N.A., as
    administrative agent and L/C Issuer, and the lenders party
    thereto (incorporated by reference from Exhibit 10.1 to
    EACs Current Report on
    Form 8-K,
    filed with the SEC on February 8, 2008). 173




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ENCORE
    ACQUISITION COMPANY
  ExhibitNo.

Description10
.12

Second Amendment to Amended and Restated Credit Agreement, dated
    as of May 22, 2008, by and among Encore Acquisition
    Company, Encore Operating, L.P., Bank of America, N.A., as
    administrative agent and L/C Issuer, and the lenders party
    thereto (incorporated by reference from Exhibit 99.2 to
    EACs Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2008, filed with the SEC on
    August 8, 2008).10
.13

Third Amendment to Amended and Restated Credit Agreement, dated
    as of March 10, 2009, by and among Encore Acquisition
    Company, Encore Operating, L.P., Bank of America, N.A., as
    administrative agent and L/C issuer, and the lenders party
    thereto (incorporated by reference from Exhibit 10.1 of
    EACs Current Report on
    Form 8-K,
    filed with the SEC on March 11, 2009).10
.14

Fourth Amendment to Amended and Restated Credit Agreement, dated
    as of December 9, 2009, by and among Encore Acquisition
    Company, Encore Operating, L.P., Bank of America, N.A., as
    administrative agent and L/C issuer, and the lenders party
    thereto (incorporated by reference from Exhibit 10.1 of
    EACs Current Report on
    Form 8-K,
    filed with the SEC on December 15, 2009).10
.15

Credit Agreement dated as of March 7, 2007 by and among
    Encore Energy Partners Operating LLC, Encore Energy Partners LP,
    Bank of America, N.A., as administrative agent and L/C Issuer,
    Banc of America Securities LLC, as sole lead arranger and sole
    book manager, and other lenders (incorporated by reference from
    Exhibit 10.2 to EACs Current Report on
    Form 8-K,
    filed with the SEC on March 13, 2007).10
.16

First Amendment to Credit Agreement, dated August 22, 2007,
    by and among Encore Energy Partners Operating LLC, Encore Energy
    Partners LP, Bank of America, N.A., as administrative agent and
    L/C Issuer, Banc of America Securities LLC, as sole lead
    arranger and sole book manager and other lenders (incorporated
    by reference from Exhibit 10.1 to EACs Current Report
    on
    Form 8-K,
    filed with the SEC on August 28, 2007).10
.17

Second Amendment to Credit Agreement, dated as of March 10,
    2009, by and among Encore Energy Partners Operating LLC, Encore
    Energy Partners LP, Bank of America, N.A., as administrative
    agent and L/C issuer, and the lenders party thereto
    (incorporated by reference from Exhibit 10.1 of ENPs
    Current Report on
    Form 8-K,
    filed with the SEC on March 11, 2009)10
.18

Third Amendment to Credit Agreement, dated as of August 11,
    2009, by and among Encore Energy Partners Operating LLC, Encore
    Energy Partners LP, Bank of America, N.A., as the administrative
    agent and L/C issuer, and the lenders party thereto
    (incorporated by reference from Exhibit 10.1 of ENPs
    Current Report on
    Form 8-K
    filed on August 13, 2009).10
.19

Fourth Amendment to Credit Agreement, dated as of
    November 24, 2009, by and among Encore Energy Partners
    Operating LLC, Encore Energy Partners LP, Bank of America, N.A.,
    as the administrative agent and L/C issuer, and the lenders
    party thereto (incorporated by reference from Exhibit 10.1
    of ENPs Current Report on
    Form 8-K,
    filed with the SEC on December 1, 2009).10
.20

Amended and Restated Administrative Services Agreement, dated as
    of September 17, 2007, by and among Encore Energy Partners
    GP LLC, Encore Energy Partners LP, Encore Energy Partners
    Operating LLC, Encore Acquisition Company and Encore Operating,
    L.P. (incorporated by reference from Exhibit 10.2 to
    EACs Current Report on
    Form 8-K,
    filed with the SEC on September 21, 2007).10
.21

Registration Rights Agreement, dated August 18, 1998, by
    and among EAC and the other parties thereto (incorporated by
    reference to Exhibit 4.2 to EACs Registration
    Statement on
    Form S-1
    (File
    No. 333-47540),
    filed with the SEC on October 6, 2000).10
.22

Second Amended and Restated Agreement of Limited Partnership of
    Encore Energy Partners LP (incorporated by reference from
    Exhibit 10.3 to EACs Current Report on
    Form 8-K,
    filed with the SEC on September 21, 2007)10
.23

Amendment No. 1 to Second Amended and Restated Agreement of
    Limited Partnership of Encore Energy Partners LP, dated as of
    May 10, 2007 (incorporated by reference from
    Exhibit 10.5 to EACs Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2008, filed with the SEC on
    May 9, 2008).12
.1*

Statement showing computation of ratios of earnings (loss) to
    fixed charges.21
.1*

Subsidiaries of EAC as of February 22, 2010.23
.1*

Consent of Ernst & Young LLP. 174




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  ExhibitNo.

Description23
.2*

Consent of Miller and Lents, Ltd.24
.1*

Power of Attorney (included on the signature page of this
    Report).31
.1*

Rule 13a-14(a)/15d-14(a)
    Certification (Principal Executive Officer).31
.2*

Rule 13a-14(a)/15d-14(a)
    Certification (Principal Financial Officer).32
.1*

Section 1350 Certification (Principal Executive Officer).32
.2*

Section 1350 Certification (Principal Financial Officer).99
.1*

Miller and Lents, Ltd. report on the Reserves and Future Net
    Revenues of Encore Acquisition Company as of December 31,
    2009.     *
    
    Filed herewith.+
    
    Management contract or compensatory plan, contract, or
    arrangement. 175




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  SIGNATURES
        By:
    /s/  Jon
    S. Brumley        Signature

Title or Capacity

Date/s/  I.
    Jon BrumleyI.
    Jon Brumley

Chairman of the Board and Director

February 22, 2010/s/  Jon
    S. BrumleyJon
    S. Brumley

Chief Executive Officer, President, and
    Director (Principal Executive Officer)

February 22, 2010/s/  Robert
    C. ReevesRobert
    C. Reeves

Senior Vice President, Chief Financial
    Officer, Treasurer, and Corporate Secretary (Principal Financial
    Officer)

February 22, 2010/s/  Andrea
    HunterAndrea
    Hunter

Vice President, Controller, and Principal Accounting Officer

February 22, 2010/s/  John
    A. BaileyJohn
    A. Bailey

Director

February 22, 2010/s/  Martin
    C. BowenMartin
    C. Bowen

Director

February 22, 2010/s/  Ted
    Collins, Jr.Ted
    Collins, Jr.

Director

February 22, 2010/s/  Ted
    A. GardnerTed
    A. Gardner

Director

February 22, 2010 176




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##### Table of Contents



ENCORE
    ACQUISITION COMPANY
  Signature

Title or Capacity

Date/s/  John
    V. GenovaJohn
    V. Genova

Director

February 22, 2010/s/  James
    A. Winne IIIJames
    A. Winne III

Director

February 22, 2010  177