Document:

<PAGE>
                                                                    EXHIBIT 10.6

                      SECOND AMENDMENT TO CREDIT AGREEMENT

         This Second Amendment to Credit Agreement (this "SECOND AMENDMENT") is
executed as of October 21, 2003 (the "EFFECTIVE DATE"), by and among Encore
Acquisition Company, a Delaware corporation ("BORROWER"). Encore Operating,
L.P., a Texas limited partnership ("OPERATING"). Fleet National Bank, a national
banking association, as Administrative Agent ("ADMINISTRATIVE AGENT"), and the
financial institutions a party hereto as Banks ("BANKS").

                              W I T N E S S E T H:

         WHEREAS, Borrower, Operating, Administrative Agent, the other Agents a
party thereto and Banks are parties to that certain Credit Agreement dated as of
June 25, 2002 (as amended, the "CREDIT AGREEMENT") (unless otherwise defined
herein, all terms used herein with their initial letter capitalized shall have
the meaning given such terms in the Credit Agreement); and

         WHEREAS, pursuant to the Credit Agreement, Banks have made a revolving
credit loan to Borrower; and

         WHEREAS, Borrower and Operating have requested that Banks (a) amend
certain terms of the Credit Agreement in certain respects, and (b) increase the
Borrowing Base to $270,000,000 to be effective as of December 1, 2003 and
continuing until the first Redetermination thereafter; and

         WHEREAS, subject to the terms and conditions set forth herein, Banks
have agreed to Borrower's and Operating's requests.

         NOW THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged and confessed,
Borrower, Operating, Administrative Agent and each Bank hereby agree as follows:

         SECTION 1. AMENDMENTS. In reliance on the representations, warranties,
covenants and agreements contained in this Second Amendment, and subject to the
satisfaction of the conditions precedent set forth in Section 3 hereof, the
Credit Agreement is hereby amended effective as of the Effective Date in the
manner provided in this Section 1.

         1.1.     AMENDMENT TO DEFINITIONS. The definitions of "LOAN PAPERS" and
"PERMITTED ENCUMBRANCES" contained in Section 1.1 of the Credit Agreement shall
be amended to read in full as follows:

                  "LOAN PAPERS" means this Agreement, the First Amendment, the
         Second Amendment, the Notes, the Mortgages, each Borrower Pledge
         Agreement, each Subsidiary Pledge Agreement, each Facility Guaranty,
         and all other certificates, documents or instruments delivered in
         connection with this Agreement, as the foregoing may be amended from
         time to time.

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<PAGE>

                  "PERMITTED ENCUMBRANCES" means with respect to any asset:

                  (a)      Liens (if any) securing the Obligations (including,
         without limitation, indebtedness, liabilities and obligations pursuant
         to any Hedge Transaction entered into by a Credit Party with any Bank
         or any Affiliate of any Bank);

                  (b)      minor defects in title which do not secure the
         payment of money and otherwise have no material adverse effect on the
         value or the operation of the subject property, and for the purposes of
         this Agreement, a minor defect in title shall include, but not be
         limited to, easements, zoning restrictions, rights-of-way, servitudes,
         permits, surface leases and other similar rights in respect of surface
         operations, and easements for pipelines, streets, alleys, highways,
         telephone lines, power lines, railways and other easements and
         rights-of-way, on, over or in respect of any of the properties of any
         Credit Party that are customarily granted in the oil and gas industry;

                  (c)      contractual or statutory Liens securing obligations
         for labor, services, materials and supplies furnished to Mineral
         Interests and Liens arising under joint operating agreements entered
         into in the ordinary course of business, in each case securing
         obligations which are not delinquent (except to the extent permitted by
         Section 9.7);

                  (d)      contractual or statutory mechanic's, materialmen's,
         warehouseman's, journeyman's and carrier's Liens and other similar
         Liens arising in the ordinary course of business which are not
         delinquent (except to the extent permitted by Section 9.7);

                  (e)      Liens for Taxes or assessments not yet due or not yet
         delinquent, or, if delinquent, that are not required to be paid subject
         to satisfaction of the conditions set forth in Section 9.7;

                  (f)      lease burdens payable to third parties which are
         deducted in the calculation of discounted present value in the Reserve
         Report including, without limitation, any royalty, overriding royalty,
         net profits interest, production payment, carried interest or
         reversionary working interest;

                  (g)      Liens encumbering assets securing Debt incurred to
         finance the purchase of such assets, provided, that (i) the principal
         amount of the Debt secured by a purchased asset shall not exceed one
         hundred percent (100%) of the purchase price of such asset, (ii) such
         Liens shall not extend to or encumber any other asset of any Credit
         Party, (iii) such Liens shall attach to such purchased asset
         substantially simultaneously with the purchase of such asset, and (iv)
         the aggregate amount of all Debt secured by such Liens shall not exceed
         $15,000,000;

                  (h)      Liens securing Hedge Transactions, including, without
         limitation, pledges of cash or cash equivalents, provided, that, (i)
         such Hedge Transactions comply with Section 10.11 to the extent
         applicable, and (ii) the aggregate amount of cash or cash equivalents
         pledged (or the fair market value of other, non-cash collateral
         pledged) shall not exceed $15,000,000 at any time; and

                                       2

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                  (i)      to the extent not included in clauses (a) through (h)
         above, Permitted Encumbrances under and as defined in the Mortgages.

         SECTION 2. BORROWING BASE. The Borrowing Base shall be $270,000,000
effective December 1, 2003 and continuing until the first Redetermination
thereafter. Borrower, Operating and Banks agree that the Redetermination
provided for in this Section 2 (a) shall be deemed to be the Scheduled
Redetermination to occur on December 1, 2003 pursuant to Section 5.2 of the
Credit Agreement, and (b) shall not be construed or deemed to be a Special
Redetermination for purposes of Section 5.3 of the Credit Agreement.

         SECTION 3. CONDITIONS PRECEDENT. The effectiveness of the amendments to
the Credit Agreement contained in Section 1 hereof is subject to the
satisfaction of each of the following conditions precedent:

         3.1.     NO DEFAULT. No Default or Event of Default shall have occurred
which is continuing.

         3.2.     BORROWING BASE INCREASE FEE. Borrower shall have paid to
Administrative Agent, for the ratable benefit of each Bank, a borrowing base
increase fee in an amount equal to one-quarter of one percent (0.250%) of the
amount of the increase in the Borrowing Base as reflected in Section 2 hereof.

         3.3.     OTHER FEES. Borrower shall have paid to Administrative Agent
any fees payable to Administrative Agent or any Affiliate of Administrative
Agent pursuant to this Second Amendment and any separate agreement among
Borrower, Operating, Administrative Agent or any Affiliate of Administrative
Agent in consideration for providing services in connection with the credit
facilities provided by the Credit Agreement.

         3.4.     OTHER DOCUMENTS. Administrative Agent shall have been provided
with such other documents, instruments and agreements, and Borrower and
Operating shall have taken such actions, as Administrative Agent may reasonably
require in connection with this Second Amendment and the transactions
contemplated hereby.

         SECTION 4. REPRESENTATIONS AND WARRANTIES OF BORROWER AND OPERATING. To
induce Banks and Administrative Agent to enter into this Second Amendment,
Borrower and Operating hereby jointly and severally represent and warrant to
Banks and Administrative Agent as follows:

         4.1.     REAFFIRM EXISTING REPRESENTATIONS AND WARRANTIES. Each
representation and warranty of each Credit Party contained in the Credit
Agreement and the other Loan Papers is true and correct on the date hereof and
will be true and correct after giving effect to the amendments set forth in
Section 1 hereof.

         4.2.     DUE AUTHORIZATION; NO CONFLICT. The execution, delivery and
performance by Borrower and Operating of this Second Amendment are within
Borrower's and Operating's corporate and partnership powers (as applicable),
have been duly authorized by all necessary action, require no action by or in
respect of, or filing with, any governmental body, agency or official and do not
violate or constitute a default under any provision of applicable law or any
Material Agreement binding upon Borrower, Operating or any other Credit Party or
result in the

                                       3

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creation or imposition of any Lien upon any of the assets of any Credit Party
except Permitted Encumbrances.

         4.3.     VALIDITY AND ENFORCEABILITY; EXTENSION OF LIENS. This Second
Amendment constitutes the valid and binding obligation of Borrower and Operating
enforceable in accordance with its terms, except as (i) the enforceability
thereof may be limited by bankruptcy, insolvency or similar laws affecting
creditor's rights generally, and (ii) the availability of equitable remedies may
be limited by equitable principles of general application.

         4.4.     NO DEFAULT OR EVENT OF DEFAULT. No Default or Event of Default
has occurred which is continuing.

         SECTION 5. MISCELLANEOUS.

         5.1.     REAFFIRMATION OF LOAN PAPERS. Any and all of the terms and
provisions of the Credit Agreement and the Loan Papers shall, except as amended
and modified hereby, remain in full force and effect. The amendments
contemplated hereby shall not limit or impair any Liens securing the
Obligations, each of which are hereby ratified, affirmed and extended to secure
the Obligations as they may be modified pursuant hereto.

         5.2.     PARTIES IN INTEREST. All of the terms and provisions of this
Second Amendment shall bind and inure to the benefit of the parties hereto and
their respective successors and assigns.

         5.3.     LEGAL EXPENSES. Borrower hereby agrees to pay on demand all
reasonable fees and expenses of counsel to Administrative Agent incurred by
Administrative Agent in connection with the preparation, negotiation and
execution of this Second Amendment and all related documents.

         5.4.     COUNTERPARTS. This Second Amendment may be executed in
counterparts, and all parties need not execute the same counterpart; however, no
party shall be bound by this Second Amendment until Borrower, Operating and
Required Banks have executed a counterpart. Facsimiles shall be effective as
originals.

         5.5.     COMPLETE AGREEMENT. THIS SECOND AMENDMENT, THE CREDIT
AGREEMENT AND THE OTHER LOAN PAPERS REPRESENT THE FINAL AGREEMENT AMONG THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
OR AMONG THE PARTIES.

         5.6.     HEADINGS. The headings, captions and arrangements used in this
Second Amendment are, unless specified otherwise, for convenience only and shall
not be deemed to limit, amplify or modify the terms of this Second Amendment,
nor affect the meaning thereof.

         5.7.     EFFECTIVENESS. This Second Amendment shall be effective
automatically and without necessity of any further action by Borrower,
Operating, Administrative Agent or Banks when counterparts hereof have been
executed by Borrower, Operating and Required Banks, and all conditions to the
effectiveness hereof set forth herein have been satisfied.

                                       4
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to be duly executed by their respective Authorized Officers on the
date and year first above written.

                           [Signature pages to follow]

                                       5

<PAGE>

                                 SIGNATURE PAGE
                                       TO
                      SECOND AMENDMENT TO CREDIT AGREEMENT
                                  BY AND AMONG
                           ENCORE ACQUISITION COMPANY,
                             ENCORE OPERATING, L.P.,
                  FLEET NATIONAL BANK, AS ADMINISTRATIVE AGENT,
                          AND THE BANKS A PARTY THERETO

BORROWER:

ENCORE ACQUISITION COMPANY,
a Delaware corporation

By:    [ILLEGIBLE]
Name:  [ILLEGIBLE]
Title: ASSISTANT TREASURER

OPERATING:

ENCORE OPERATING, L.P.,
a Texas limited partnership

BY:   EAP Operating, Inc.,
      a Delaware corporation,
      its sole general partner

      By:   [ILLEGIBLE]
      Name: [ILLEGIBLE]
      Title: ASSISTANT TREASURER

                                [Signature Page]

<PAGE>

                                 SIGNATURE PAGE
                                       TO
                      SECOND AMENDMENT TO CREDIT AGREEMENT
                                  BY AND AMONG
                           ENCORE ACQUISITION COMPANY,
                             ENCORE OPERATING, L.P.,
                  FLEET NATIONAL BANK, AS ADMINISTRATIVE AGENT,
                          AND THE BANKS A PARTY THERETO

ADMINISTRATIVE AGENT:

FLEET NATIONAL BANK,
as Administrative Agent

By:  [ILLEGIBLE]
     [ILLEGIBLE]
     Director

BANK:

FLEET NATIONAL BANK,
as a Bank

By:  [ILLEGIBLE]
     [ILLEGIBLE]
     Director

                                [Signature Page]

<PAGE>

                                 SIGNATURE PAGE
                                       TO
                      SECOND AMENDMENT TO CREDIT AGREEMENT
                                  BY AND AMONG
                           ENCORE ACQUISITION COMPANY,
                             ENCORE OPERATING, L.P.,
                  FLEET NATIONAL BANK, AS ADMINISTRATIVE AGENT,
                          AND THE BANKS A PARTY THERETO

BANK:

WACHOVIA BANK, N.A.

By:    /s/  David Humphreys
       ---------------------------
Name:  David Humphreys
Title: Vice President

                                [Signature Page]

<PAGE>

                                 SIGNATURE PAGE
                                       TO
                      SECOND AMENDMENT TO CREDIT AGREEMENT
                                  BY AND AMONG
                           ENCORE ACQUISITION COMPANY,
                             ENCORE OPERATING, L.P.,
                  FLEET NATIONAL BANK, AS ADMINISTRATIVE AGENT,
                          AND THE BANKS A PARTY THERETO

BANK:

FORTIS CAPITAL CORP.

By:    /s/ David Montgomery
       --------------------
Name:  DAVID MONTGOMERY
Title: SENIOR VICE PRESIDENT

By:    /s/ Darrell W. Holley
       ---------------------
Name:  DARRELL W. HOLLEY
Title: MANAGING DIRECTOR

                                [Signature Page]

<PAGE>

                                 SIGNATURE PAGE
                                       TO
                      SECOND AMENDMENT TO CREDIT AGREEMENT
                                  BY AND AMONG
                           ENCORE ACQUISITION COMPANY,
                             ENCORE OPERATING, L.P.,
                  FLEET NATIONAL BANK, AS ADMINISTRATIVE AGENT,
                          AND THE BANKS A PARTY THERETO

BANK:

BNP PARIBAS

By:    /s/ David Dodd
       ---------------------
Name     DAVID DODD
Title:    DIRECTOR

By:    /s/ Polly Schott
       --------------------
Name      POLLY SCHOTT
Title:   VICE PRESIDENT

                                [Signature Page]

<PAGE>

                                 SIGNATURE PAGE
                                       TO
                      SECOND AMENDMENT TO CREDIT AGREEMENT
                                  BY AND AMONG
                           ENCORE ACQUISITION COMPANY,
                             ENCORE OPERATING, L.P.,
                  FLEET NATIONAL BANK, AS ADMINISTRATIVE AGENT,
                          AND THE BANKS A PARTY THERETO

BANK:

CREDIT SUISSE FIRST BOSTON,
acting through its CAYMAN ISLANDS BRANCH

By:    /s/ James P. Moran
       ------------------
Name:    JAMES P. MORAN
Title:      DIRECTOR

By:    /s/ David J. Dodd
       ------------------
Name:     DAVID J. DODD
Title:       ASSOCIATE

                                [Signature Page]

<PAGE>

                                 SIGNATURE PAGE
                                       TO
                      SECOND AMENDMENT TO CREDIT AGREEMENT
                                  BY AND AMONG
                           ENCORE ACQUISITION COMPANY,
                             ENCORE OPERATING, L.P.,
                  FLEET NATIONAL BANK, AS ADMINISTRATIVE AGENT,
                          AND THE BANKS A PARTY THERETO

BANK:

THE FROST NATIONAL BANK

By:     /s/ John s. Warren
        -------------------
Name:     JOHN S. WARREN
Title: SENIOR VICE PRESIDENT

                                [Signature Page]

<PAGE>

                                 SIGNATURE PAGE
                                       TO
                      SECOND AMENDMENT TO CREDIT AGREEMENT
                                  BY AND AMONG
                           ENCORE ACQUISITION COMPANY,
                             ENCORE OPERATING, L.P.,
                  FLEET NATIONAL BANK, AS ADMINISTRATIVE AGENT,
                          AND THE BANKS A PARTY THERETO

BANK:

COMMERCIAL BANK

By:    [ILLEGIBLE]
Name:  [ILLEGIBLE]
Title: VICE PRESIDENT

                                [Signature Page]

<PAGE>

                                 SIGNATURE PAGE
                                       TO
                      SECOND AMENDMENT TO CREDIT AGREEMENT
                                  BY AND AMONG
                           ENCORE ACQUISITION COMPANY,
                             ENCORE OPERATING, L.P.,
                  FLEET NATIONAL BANK, AS ADMINISTRATIVE AGENT,
                          AND THE BANKS A PARTY THERETO

BANK:

UNION BANK OF CALIFORNIA N.A.

By:    [ILLEGIBLE]
Name:  [ILLEGIBLE]
Title: AVP

                                [Signature Page]

<PAGE>

                                 SIGNATURE PAGE
                                       TO
                      SECOND AMENDMENT TO CREDIT AGREEMENT
                                  BY AND AMONG
                           ENCORE ACQUISITION COMPANY,
                             ENCORE OPERATING, L.P.,
                  FLEET NATIONAL BANK, AS ADMINISTRATIVE AGENT,
                          AND THE BANKS A PARTY THERETO

BANK:

CREDIT LYONNAIS NEW YORK BRANCH

By:    [ILLEGIBLE]
Name:  [ILLEGIBLE]
Title: SENIOR VICE PRESIDENT

                                [Signature Page]

<PAGE>

                                 SIGNATURE PAGE
                                       TO
                      SECOND AMENDMENT TO CREDIT AGREEMENT
                                  BY AND AMONG
                           ENCORE ACQUISITION COMPANY,
                             ENCORE OPERATING, L.P.,
                  FLEET NATIONAL BANK, AS ADMINISTRATIVE AGENT,
                          AND THE BANKS A PARTY THERETO

BANK:

COMPASS BANK

By:    [ILLEGIBLE]
Name:  [ILLEGIBLE]
Title: SENIOR VICE PRESIDENT

                                [Signature Page]

<PAGE>

                                 SIGNATURE PAGE
                                       TO
                      SECOND AMENDMENT TO CREDIT AGREEMENT
                                  BY AND AMONG
                           ENCORE ACQUISITION COMPANY,
                             ENCORE OPERATING, L.P.,
                  FLEET NATIONAL BANK, AS ADMINISTRATIVE AGENT,
                          AND THE BANKS A PARTY THERETO

BANK:

SUNTRUST BANK

By:    /s/ JAMES M. WARREN
       -------------------
Name:    JAMES M. WARREN
Title:      DIRECTOR

                                [Signature Page]

<PAGE>

                                 SIGNATURE PAGE
                                       TO
                      SECOND AMENDMENT TO CREDIT AGREEMENT
                                  BY AND AMONG
                           ENCORE ACQUISITION COMPANY,
                             ENCORE OPERATING, L.P.,
                  FLEET NATIONAL BANK, AS ADMINISTRATIVE AGENT,
                          AND THE BANKS A PARTY THERETO

BANK:

RZB FINANCE LLC

By:    [ILLEGIBLE]
Name:  [ILLEGIBLE]
Title: VICE PRESIDENT

By:    [ILLEGIBLE]
Name:  [ILLEGIBLE]
Title: ASSISTANT VICE PRESIDENT

                                [Signature Page]

<PAGE>

                                 SIGNATURE PAGE
                                       TO
                      SECOND AMENDMENT TO CREDIT AGREEMENT
                                  BY AND AMONG
                           ENCORE ACQUISITION COMPANY,
                             ENCORE OPERATING, L.P.,
                  FLEET NATIONAL BANK, AS ADMINISTRATIVE AGENT,
                          AND THE BANKS A PARTY THERETO

BANK:

BANK OF SCOTLAND

By:    [ILLEGIBLE]
Name:  [ILLEGIBLE]
Title: FIRST VICE PRESIDENT

                                [Signature Page]<PAGE>
                                                                    EXHIBIT 10.8
                               SEVERANCE AGREEMENT

               THIS SEVERANCE AGREEMENT ("Agreement") is made and effective as
of the 18th day of December, 2003 (the "Effective Date"), by and between ENCORE
ACQUISITION COMPANY, a Delaware corporation (the "Company"), and MORRIS B. SMITH
("Employee").

         1. Resignation of Employment: Effective as of December 31, 2003 (the
"Severance Date"), the Employee resigns his position as an employee of the
Company.

         2. Severance Payments: In lieu of severance under any other plan or
arrangement of the Company, the Company shall pay to Employee (or his estate as
applicable) a lump sum severance amount in two equal installments (the
"Severance Payments"), provided that the Waiver and Release has been executed as
provided in Section 12 and not revoked for a period of 7 days and Employee is
otherwise in compliance with this Agreement. Each Severance Payment shall be
equal to one-half of the sum of:

                    (1)  $352,500;

                    (2)  an amount equal to the product of (i) the number of
                         shares subject to Employee's unvested options to
                         purchase the Company's common stock and (ii) the
                         difference between (A) the closing sales price of a
                         share of the Company's common stock, as reported on the
                         New York Stock Exchange Composite Transactions on the
                         Severance Date, and (B) the weighted average exercise
                         price of such unvested options; and

                    (3)  an amount equal to the product of (i) one-third of the
                         number of Employee's restricted shares of the Company's
                         common stock held by Employee, rounded to the nearest
                         share, and (ii) the closing sales price of a share of
                         the Company's common stock, as reported on the New York
                         Stock Exchange Composite Transactions on the Severance
                         Date.

The first Severance Payment will be paid within 30 days following the Severance
Date, and the second Severance Payment will be payable within 30 days following
June 30, 2004. The parties agree that the unvested options and restricted shares
which are the subject of this obligation are listed on Exhibit A attached
hereto, and that except for the payment obligations described above, such
options and restricted shares shall be forfeited as of the Severance Date.

         3. Confidentiality and Noncompetition:

               (a) The Company has, and until the Severance Date will, provide
Employee with Confidential Information regarding the Company and the Company's
business. In return for this and other consideration provided under this
Agreement, Employee agrees he will not disclose or make available to any other
person or entity, or use for his own personal gain, any Confidential
Information, except for such disclosures as required in the performance of his
duties

<PAGE>

hereunder or as required pursuant to any law or governmental regulation or
ruling. For purposes of this Agreement, "Confidential Information" shall mean
any and all information, data and knowledge that has been created, discovered,
developed or otherwise become known to the Company or any of its affiliates or
ventures or in which property rights have been assigned or otherwise conveyed to
the Company or any of its affiliates or ventures, which information, data or
knowledge has commercial value in the business in which the Company is engaged,
except such information, data or knowledge as is or becomes known to the public
without violation of the terms of this Agreement. By way of illustration, but
not limitation, Confidential Information includes trade secrets, acquisition,
exploration, development, exploitation and production prospects and strategies
for oil and natural gas reserves, processes, formulas, know-how, improvements,
discoveries, developments, designs, inventions, techniques, marketing plans,
manuals, records of research, reports, memoranda, computer software, strategies,
forecasts, new products, unpublished financial statements or parts thereof,
budgets or other financial information, projections, licenses, prices, costs,
and employee, customer and supplier lists or parts thereof

               (b) Employee recognizes that in each of the highly competitive
businesses in which the Company is engaged, the Company's trade secrets and
other Confidential Information, along with personal contacts, are of primary
importance in (i) identifying, acquiring, exploring for, developing, exploiting
and producing oil and natural gas reserves, and (ii) retaining the accounts and
goodwill of present customers and protecting the business of the Company. The
Employee, therefore, agrees that until the Severance Date and (A) for a period
of six months thereafter, he will not (i) acquire, for his own account or the
account of any business in which he owns more than 5% of the outstanding capital
stock, any oil or natural gas property in Crockett County, Texas Andrews County,
Texas, Ecotr County, Texas, Claiborne Parish, Louisiana, Webster Parish,
Louisiana, Bossier Parish , Louisiana, Blaine County, Montana, Carter County,
Montana, Dawson County, Montana, Fallon County , Montana, Hill County, Montana,
Powder River County, Montana, Prairie County, Montana, Wibaux County, Montana,
Bowman County North Dakota, Stark County, North Dakota, Ward County, North
Dakota or San Juan County, Utah (the "Relevant Geographic Area"), (ii) accept
employment, advise, assist or render service in any way to any person that
competes directly with the Company in the acquisition, exploration, development,
exploitation or production of oil and natural gas in the Relevant Geographic
Area or (iii) enter into or take part in or lend his name, counsel or assistance
to any business, either as proprietor, principal, investor, partner, director,
officer, executive, consultant, advisor, agent, independent contractor, or in
any other capacity whatsoever, for any purpose that would be directly
competitive with the acquisition, exploration, development, exploitation or
production activities of the Company or any of its affiliated companies in the
Relevant Geographic Area and (B) for a period of six months after the Severance
Date he will not, on his own behalf or on behalf of any person, firm or company,
directly or indirectly, solicit or offer employment to any person who has been
employed by the Company or any subsidiary thereof at any time during the
one-year period immediately preceding such solicitation (all of the foregoing
activities are collectively referred to as the "Prohibited Activity").

         The Employee shall not, directly or indirectly, make or cause to be
made and shall use his best efforts to cause the officers, directors, employee,
agents and representatives of any

                                      -2-

<PAGE>

entity or person controlled by the Employee not to make or cause to be made, any
disparaging, denigrating, derogatory or other negative, misleading or false
statement orally or in writing to any person or entity, including members of the
investment community, press, and customers, competitors and advisors to the
Company, about the Company, its shareholders, subsidiaries or affiliates, their
respective officers or members of their boards of directors, or the business
strategy or plans, policies, practices or operations of the Company, its
shareholders, subsidiaries or affiliates.

               (c) In addition to all other remedies at law or in equity which
the Company may have for breach of a provision of this Section 3 by the
Employee, it is agreed that in the event of any breach or attempted or
threatened breach of any such provision, the Company shall be entitled to
immediately cease any payment otherwise required under Section 2 and, upon
application to any court of proper jurisdiction, to a temporary restraining
order or preliminary injunction (without the necessity of (i) proving
irreparable harm, (ii) establishing that monetary damages are inadequate or
(iii) posting any bond with respect thereto) against the Employee prohibiting
such breach or attempted or threatened breach by proving only the existence of
such breach or attempted or threatened breach. If the provisions of this Section
3 should ever be deemed to exceed the time, geographic or occupational
limitations permitted by the applicable law, the Employee and the Company agree
that such provisions shall be and are hereby reformed to the maximum time,
geographic or occupational limitations permitted by the applicable law.

               (d) The covenants of the Employee set forth in this Section 3 are
independent of and severable from every other provision of this Agreement; and
the breach of any other provision of this Agreement by the Company or the breach
by the Company of any other agreement between the Company and the Employee shall
not affect the validity of the provisions of this Section 3 or constitute a
defense of the Employee in any suit or action brought by the Company to enforce
any of the provisions of this Section 3 or seek any relief for the breach
thereof by Employee.

               (e) The Employee acknowledges, agrees and stipulates that: (i)
the terms and provisions of this Agreement are reasonable and constitute an
otherwise enforceable agreement to which the terms and provisions of this
Section 3 are ancillary or a part of; (ii) the consideration provided by the
Company under this Agreement is not illusory; and (iii) the consideration given
by the Company under this Agreement, including, without limitation, the
provision by the Company of Confidential Information to the Employee as
contemplated by this Section 3, gives rise to the Company's interest in
restraining and prohibiting the Employee from engaging in the Prohibited
Activity within the Relevant Geographic Area as provided under this Section 3,
and the Employee's covenant not to engage in the Prohibited Activity within the
Relevant Geographic Area pursuant to this Section 3 is designed to enforce the
Employee's consideration (or return promises), including, without limitation,
the Employee's promise to not disclose Confidential Information under this
Agreement.

         4. Expenses: The Company and Employee shall each be responsible for
their own costs and expenses, including, without limitation, court costs and
attorneys' fees, incurred as a

                                      -3-

<PAGE>

result of any claim, action or proceeding arising out of, or challenging the
validity or enforceability of, this Agreement or any provisions hereof.

         5. Notices: For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:

                  If to the Company:   Encore Acquisition Company
                                       777 Main Street, Suite 1400
                                       Fort Worth, TX  76102
                                       Attention:  President

                  If to Employee:      Morris B. Smith
                                       [Address]
                                       [Address]

or to such other address as either party may furnish to the other in writing in
accordance herewith, except that notices of changes of address shall be
effective only upon receipt.

         6. Applicable Law: The validity, interpretation, construction and
performance of this Agreement will be governed by and construed in accordance
with the substantive laws of the State of Texas, but without giving effect to
the principles of conflict of laws of such State.

         7. Severability: If a court of competent jurisdiction determines that
any provision of this Agreement is invalid or unenforceable, then the invalidity
or unenforceability of that provision shall not affect the validity or
enforceability of any other provision of this Agreement and all other provisions
shall remain in full force and effect.

         8. Withholding of Taxes: The Company may withhold from any benefits
payable under this Agreement all federal, state, city or other taxes as may be
required pursuant to any law or governmental regulation or ruling.

         9. No Assignment; Successors: Employee's right to receive payments or
benefits hereunder shall not be assignable or transferable, whether by pledge,
creation or a security interest or otherwise, whether voluntary, involuntary, by
operation of law or otherwise, other than by will or by the laws of descent or
distribution, and in the event of any attempted assignment or transfer contrary
to this Section 9 the Company shall have no liability to pay any amount so
attempted to be assigned or transferred. This Agreement shall inure to the
benefit of and be enforceable by Employee's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. This Agreement shall be binding upon and inure to the benefit of the
Company, its successors and assigns (including, without limitation, any company
into or with which the Company may merge or consolidate).

         10. Effect of Prior Agreements: This Agreement contains the entire
understanding between the parties hereto and supersedes any prior employment
agreement or severance

                                      -4-

<PAGE>

agreement between the Company or any predecessor of the Company and the
Employee, except that this Agreement shall not effect or operate to reduce any
benefit or compensation enuring to the Employee of a kind elsewhere provided and
not expressly provided or modified in this Agreement.

         11. Amendment and Waiver: This Agreement may be amended or modified
only upon the written consent of the Company and the Employee. The obligations
of a party and the rights of any other party under this Agreement (including,
without limitation, the obligations of the Employee under Section 3) may be
waived only with the written consent of such other party.

         12. Release of Claims: In consideration for the compensation and other
benefits provided pursuant to this Agreement, Employee agrees to execute a
"Waiver and Release" in substantially the form attached hereto as Exhibit B upon
his termination of employment. The Company's obligation to pay the Severance
Payments pursuant to Section 2 of this Agreement are expressly conditioned on
Employee's execution of this Waiver and Release without revoking it for a period
of 7 days, and Employee's failure to execute and deliver (without revoking) such
Waiver and Release will void the Company's remaining obligations hereunder.

                                      -5-

<PAGE>

         IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the Effective Date.

                                          ENCORE ACQUISITION COMPANY

                                          By /s/ Jon S. Brumley
                                             -----------------------------------
                                                 Jon S. Brumley
                                                 President

                                          EMPLOYEE

                                          /s/ Morris B. Smith
                                          --------------------------------------
                                           Morris B. Smith

                                      -6-

<PAGE>

                                    EXHIBIT A

Unvested Options as of December 31, 2003:

<TABLE>
<CAPTION>
                            Number of Unvested Shares         Exercise Price
<S>                         <C>                              <C>
March 8, 2001 Grant                   20,000                     $14.00

November 22, 2002 Grant               29,032                     $18.60
</TABLE>

Restricted Shares as of December 31, 2003:

8,035 shares.

                                      -7-

<PAGE>

                                    EXHIBIT B

                           FORM OF WAIVER AND RELEASE

                           ENCORE ACQUISITION COMPANY
                               WAIVER AND RELEASE

         Encore Acquisition Company has offered to pay me certain benefits (the
"Benefits") under my Severance Agreement with Encore Acquisition Company, dated
as of _______ __, 2003 (the "Severance Agreement"), which are in addition to any
remuneration or benefits to which I am already entitled. These Benefits were
offered to me in exchange for my agreement, among other things, to waive all of
my claims against and release Encore Acquisition Company and its predecessors,
successors and assigns (collectively referred to as the "Company"), all of the
affiliates (including parents and subsidiaries) of the Company (collectively
referred to as the "Affiliates") and the Company's and Affiliates' directors and
officers, employees and agents, insurers, employee benefit plans and the
fiduciaries and agents of said plans (collectively, with the Company and
Affiliates, referred to as the "Corporate Group") from any and all claims,
demands, actions, liabilities and damages arising out of or relating in any way
to my employment with or separation from the Company or the Affiliates;
provided, however, that this Waiver and Release shall not apply to any claim or
cause of action to enforce or interpret any provision contained in the Severance
Agreement. I have read this Waiver and Release and the Severance Agreement (all
of which I received together and which, together, are referred to herein as the
"Severance Agreement Materials") and they are incorporated herein by reference.
All payments under the Severance Agreement are voluntary on the part of the
Company and are not required by any legal obligation other than the Severance
Agreement. I choose to accept this offer.

         I UNDERSTAND THAT SIGNING THIS WAIVER AND RELEASE IS AN IMPORTANT LEGAL
ACT. I ACKNOWLEDGE THAT THE COMPANY HAS ADVISED ME IN WRITING TO CONSULT AN
ATTORNEY BEFORE SIGNING THIS WAIVER AND RELEASE. I UNDERSTAND THAT, IN ORDER TO
BE ELIGIBLE FOR BENEFITS, I MUST SIGN (AND RETURN TO JON S. BRUMLEY, PRESIDENT)
THIS WAIVER AND RELEASE ON OR AFTER DECEMBER 31, 2003 AND BEFORE 5 P.M. ON
JANUARY 21, 2004. I ACKNOWLEDGE THAT I HAVE BEEN GIVEN AT LEAST 21 DAYS TO
CONSIDER WHETHER TO SIGN THE SEVERANCE AGREEMENT AND WHETHER TO EXECUTE THIS
WAIVER AND RELEASE.

         In exchange for the payment to me of Benefits, which are in addition to
any remuneration or benefits to which I am already entitled, I, among other
things, (1) agree not to sue in any local, state and/or federal court regarding
or relating in any way to my employment with or separation from the Company or
the Affiliates, and (2) knowingly and voluntarily waive all claims and release
the Corporate Group from any and all claims, demands, actions, liabilities, and
damages, whether known or unknown, arising out of or relating in any way to my
employment with or separation from the Company or the Affiliates, except to the
extent that my rights are vested under the terms of employee benefit plans
sponsored by the Company or the Affiliates and except with respect to such
rights or claims as may arise after the date this Waiver and Release is
executed. This Waiver and Release includes, but is not limited to, claims and
causes of action under: Title VII of the Civil Rights Act of 1964, as amended
("Title VII"); the Age Discrimination in Employment Act of 1967, as amended,
including the Older Workers Benefit Protection Act of 1990 ("ADEA"); the Civil
Rights Act of 1866, as amended; the Civil Rights Act of 1991; the Americans with
Disabilities Act of 1990 ("ADA"); the Energy Reorganization Act, as amended, 42
U.S.C. ss 5851; the Workers Adjustment and Retraining Notification Act of 1988;
the Pregnancy Discrimination Act of 1978; the Employee Retirement Income
Security Act of 1974, as amended; the Family and Medical Leave Act of 1993; the
Fair Labor Standards Act; the Occupational Safety and Health Act; claims in
connection with workers' compensation or "whistle blower" statutes; and/or
contract, tort, defamation, slander, wrongful termination or any other state or
federal regulatory, statutory or common law. Further, I

                                      -8-

<PAGE>

expressly represent that no promise or agreement which is not expressed in the
Severance Agreement Materials has been made to me in executing this Waiver and
Release, and that I am relying on my own judgment in executing this Waiver and
Release, and that I am not relying on any statement or representation of the
Company, any of the Affiliates or any other member of the Corporate Group or any
of their agents. I agree that this Waiver and Release is valid, fair, adequate
and reasonable, is with my full knowledge and consent, was not procured through
fraud, duress or mistake and has not had the effect of misleading, misinforming
or failing to inform me.

         I acknowledge that payment of Benefits to me by the Company is not an
admission by the Company or any other member of the Corporate Group that they
engaged in any wrongful or unlawful act or that the Company or any member of the
Corporate Group violated any federal or state law or regulation.

         Should any of the provisions set forth in this Waiver and Release be
determined to be invalid by a court, agency or other tribunal of competent
jurisdiction, it is agreed that such determination shall not affect the
enforceability of other provisions of this Waiver and Release. I acknowledge
that this Waiver and Release and the other Severance Agreement Materials set
forth the entire understanding and agreement between me and the Company or any
other member of the Corporate Group concerning the subject matter of this Waiver
and Release and supersede any prior or contemporaneous oral and/or written
agreements or representations, if any, between me and the Company or any other
member of the Corporate Group. I understand that for a period of 7 calendar days
following the date that I sign this Waiver and Release, I may revoke my
acceptance of the offer, provided that my written statement of revocation is
RECEIVED on or before that seventh day by Mr. Jon S. Brumley, President, Encore
Acquisition Company, 777 Main Street, Suite 1400, Fort Worth, Texas 76102,
facsimile number: 817-877-1655, in which case the Waiver and Release will not
become effective. In the event I revoke my acceptance of this offer, the Company
shall have no obligation to provide me Benefits. I understand that failure to
revoke my acceptance of the offer within 7 calendar days from the date I sign
this Waiver and Release will result in this Waiver and Release being permanent
and irrevocable.

         I acknowledge that I have read this Waiver and Release, have had an
opportunity to ask questions and have it explained to me and that I understand
that this Waiver and Release will have the effect of knowingly and voluntarily
waiving any action I might pursue, including breach of contract, personal
injury, retaliation, discrimination on the basis of race, age, sex, national
origin, or disability and any other claims arising prior to the date of this
Waiver and Release. By execution of this document, I do not waive or release or
otherwise relinquish any legal rights I may have which are attributable to or
arise out of acts, omissions, or events of the Company or any other member of
the Corporate Group which occur after the date of the execution of this Waiver
and Release.

---------------------------------              ---------------------------------
Employee's Printed Name                        Company Representative

---------------------------------              ---------------------------------
Employee's Signature                           Company's Execution Date

---------------------------------              ---------------------------------
Employee's Signature Date                      Employee's Social Security Number

                                      -9-

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