Encore Acquisition Company Announces Completion of Paradox Basin Property Acquisition; Provides Update on Third Quarter 2002 Guidance.

Business Editors

FORT WORTH, Texas--(BUSINESS WIRE)--Aug. 29, 2002

Encore Acquisition Company ("Encore") (NYSE:EAC) announced today the completion of the previously announced acquisition of oil and natural gas properties in southeast Utah's Paradox Basin.

The final purchase price after the exercise of preferential rights was $17.9 million ($17.0 million after closing adjustments). The acquisition was funded with bank financing under Encore's existing credit facility.

The properties are divided between two prolific oil producing units: the Ratherford Unit operated by Exxon Mobil and the Aneth Unit operated by ChevronTexaco. The working and net revenue interest in the Ratherford Unit is 11.06% and 9.68% respectively, and the working interest and the net revenue interest in the Aneth Unit are 13.37% and 11.43% respectively. The net production to Encore is approximately 900 boe per day. The units produce from the Desert Creek zone at about 5,700 feet. Encore's internal reservoir engineers estimate the reserves to be 3.6 million BOE with 100% of the reserves in the proved developed producing category. Encore believes both of the properties have horizontal re-development and tertiary upside potential. The Paradox Basin Properties are expected to generate monthly cash flows of approximately $270,000 with a $22.50/bbl NYMEX oil price estimate and a $2.75/mcf NYMEX natural gas price estimate. The revenue is 93% derived from oil.

The updated third quarter guidance reflects the reduced interest in the Paradox Basin resulting from the Navajo Nation's exercise of preferential rights with respect to 10.31% of the Ratherford Unit, thereby reducing the working interest being acquired to 11.06%. Production in the third quarter, which assumes one month of volume from the Paradox Basin, is expected to increase to approximately 19,700 boe per day.

Direct lifting costs are expected to be in the range of $4.20/boe - $4.35/boe as a result of integrating the Paradox Basin acquisition and a more aggressive maintenance program in the Cedar Creek Anticline. General and administrative expenses are projected to be from $0.80/boe to $0.85/boe and depreciation, depletion and amortization should be in a range of $4.80/boe - $4.85/boe.

Interest expense is forecasted to be about $4 million on an average outstanding debt balance of $160 million. The higher interest expense includes the effect of interest rate swaps, the cash payment for the Paradox Basin, as well as the higher interest rate associated with the Company's 8 3/8% Senior Subordinated Notes issued in June.

Encore's effective tax rate for the quarter will remain at 38% with 90% deferred.

Encore intends to invest approximately $21 million in the third quarter maintaining the four-rig drilling program in the CCA, one additional rig drilling in the Permian Basin East Cowden Grayburg Unit, and continued work on the HPAI project.

Organized in 1998, Encore is a growing independent energy company engaged in the acquisition, development and exploitation of North American oil and natural gas reserves. Encore's oil and natural gas reserves are located in the Williston Basin of Montana and North Dakota, the Permian Basin of Texas and New Mexico, the Anadarko Basin of Oklahoma, the Powder River Basin of Montana and the Paradox Basin of Utah.

This press release includes forward-looking statements. Forward-looking statements give our current expectations or forecasts of future events based on assumptions and estimations that management believes are reasonable given currently available information. However, the assumptions of management and the future performance of Encore are both subject to a wide range of business risks and uncertainties and there is no assurance that these statements and projections will be met. Factors that could affect Encore's business include, but not limited to: amount, nature and timing of capital expenditures; drilling of wells; timing and amount of future production of oil and natural gas; operating costs and other expenses and; marketing of oil and natural gas. Actual results could differ materially from those presented in the forward-looking statements. Encore undertakes no obligation to publicly update or revise any forward-looking statements. Further information on risks and uncertainties is available in Encore's filings with the Securities and Exchange Commission, which are incorporated by this reference as though fully set forth herein.