Reuters:   Summers will lead a high level meeting on the economy.

Reuters:   US companies are holding more cash.

Reuters:   The Fed is likely to keep interest rates flat due to economic uncertainty.

Reuters:   Comcast (NASDAQ:CMCSA) is close to gaining control of NBC Universal from GE (NYSE:GE).

Reuters:   Bank of American (NYSE:BAC) is trying to get the head of BNY Mellon (NYSE:BK) to take CEO job.

Reuters:   Goldman Sachs (NYSE:GS) is close to buying Fannie Mae (NYSE:FNM) tax credits.

Reuters:   Wal-Mart (NYSE:WMT) announced a second round of toy cost cuts.

Reuters:   October retail sales could be a disappointment.

WSJ:   The US and GMAC are fighting about capital levels at the lending company.

WSJ:   The head of BNY Mellon told Bank of America that he is not interested in the CEO job.

WSJ:   Danbury Resources (NYSE:DNR) will buy Encore Acquisition  (NYSE:EAC) for $3.25 billion .

WSJ:   The Apple (NASDAQ:AAPL) iPhone got a luke warm reception in China.

WSJ:   Editorial content at The Detroit Free Press is being influenced by advertisers.

WSJ:   EBay (NASDAQ:EBAY) will begin an ad campaign.

WSJ:   Companies hold more assets in cash that at any time in four decades.

WSJ:   The Fed is looking at raising interest rates.

WSJ:   More college presidents are earning over $1 million a year.

WSJ:   The Institute for Supply Management numbers for last month should be up a bit.

WSJ:   Blackstone (NYSE:BX) will broaden its business in China.

WSJ:   Investors in banks should look at loss buffers.

WSJ:   Ford (NYSE:F) may change the locations of where it builds some cars after losing a UAW vote.

NYT:   Human Genome Sciences (NASDAQ:HGSI) has a promising lupus drug.

FT:   The US Senate will introduce a draft financial bill.

FT:   Wal-Mart (NYSE:WMT) is looking at urban expansion in the US.

FT:   Pfizer (NYSE:PFE) says it back US health reform.

Bloomberg:   Citigroup (NYSE:C) and JP Morgan (NYSE:JPM) are hoarding cash as if another crisis is coming which will hurt returns.

Douglas A. McIntyre

That’s what’s interesting about today’s announcement. Encore included achartthat shows the value of its hedging portfolio at a range of pricingassumptions for crude oil and natural gas. If crude sells for around$40/barrel and natural gas at about $5/thousand cubic feet, Encore’shedges pay off more than $400 million net in the 2008 fourth quarter.

In the third quarter of 2008, Encore’s net income was just over $206million, including a gain in fair value on its derivatives of about$239 million. As commodity prices fall, Encore’s hedges pay better.Encore’s shares are up about 3% today.

Paul Ausick
January 13, 2009

Encore Energy’s CEO and president said that these properties are "agood match" for a master limited partnership because they offer "highmargins, predictable production profiles, and shallow declines." Thecompany is using its revolving credit to fund the purchase. About $3million of the purchase price was used to hedge production for the nextfour years at an average price of $7.51/thousand cubic feet of naturalgas.

Encore Acquistion owns two-thirds of the common shares of Encore Energyand all the interests of Encore Energy’s general partner. At the end ofSeptember, Encore Energy reported long-term debt of $164.7 million, andEncore Acquistion reported long-term debt of $1.2 billion.

Encore Energy had $34 million in operating cash flow in the thirdquarter, and paid out about $23 million in distributions. This latestpurchase will allow the company to increase its operating cash flow,and juice its payouts a bit for the current quarter. And that’s whatMLPs are all about: increasing distributions.

Paul Ausick
December 10, 2008

• Encore Acquisition (EAC) Raised to Buy at Goldman Sachs.
• Equitable Resources (EQT) Started as Outperform at Credit Suisse.
• Health Net (HNT) Raised to Neutral at Goldman Sachs.
• Sovereign Bancorp (SOV) Raised to Buy at Citigroup.
• Whole Foods (WFMI) Raised to Hold from Underperform at Jefferies.
• XTO Energy (XTO) Raised to Buy at Goldman Sachs.

Jon C. Ogg
November 6, 2008

This is a Delaware limited partnership formed in February 2007 by EACto acquire, exploit and develop oil and natural gas properties and toacquire, own and operate related assets. Its primary business objectiveis to make quarterly cash distributions to unitholders at currentdistribution rates and to increase those quarterly cash distributionsover time.  Its assets consist primarily of producing and non-producingoil and natural gas properties in the Big Horn Basin of Wyoming andMontana, the Permian Basin of West Texas, and the Williston Basin ofNorth Dakota.

Encore Energy Partners has a current market cap of $692 million.  At$22.08 on the close, it is in the middle of its $16.56 to $28.73trading range over the last 52-weeks.

Encore Acquisition Company (NYSE: EAC) is the ultimate parent company of the general partner and its subsidiaries.

Jon C. Ogg
October 1, 2008

A firm called United Energy now has a $120 target near-term for oil, and recently and at the end of February we saw Deutsche Bank ponder the thought of a $150/barrel price for oil.  Now we have Goldman Sachs (NYSE: GS) joining the fray with a call that at least ponders (not predicting) prices far north of its last $135 super-spike call that had been raised from $100/barrel.  Goldman Sachs isn’t really predicting $200 oil, but they are discussing the possibility of such.  One thing it has done is raised the lower-end floor of its 2008 to 2012 band to $60.00 per barrel.  It even noted that average selling prices were going to remain high: 

• Average $95/barrel in 2008,
• Average $105/barrel in 2009,
• and Average $110/barrel in 2010.

Keep in mind this call was very much of a hedged call today that is more of a possibility and conceptual call, so don’t go out thinking that this was a do or die prediction.  Goldman Sachs did issue some favorite stocks in the oil patch as well, and it is keeping its predictions high for the sector and the commodities in there as well.  This would allow for more of these to oils to hike their dividends.  but we would note that less than a month ago we saw Goldman Sachs cut its coal targets.

It added Ultra Petroleum (NYSE: UPL) and Encore Acquisition (NYSE: EAC) to its America’s Buy List, but it simultaneously removed Forest Oil (NYSE: FST) and Quicksilver Resources (NYSE: KWK) from the list with neutral ratings.  Most refiner estimates were lowered as a result and is neutral on integrated oils in hopes of a pullback. It still has an attractive coverage view for these.  El Paso (NYSE: EP) was also raised to Buy in the coverage today to the Americas Buy List.

With oil north of $105 today, T. Boone Pickens is feeling major pain IF he is still short like he recently noted.  He’s been right the whole way up calling for $80 before he’s 80 and then calling for $100 in different calls in 2007.  Pleas keep in mind that Goldman Sachs has been making more positive calls in the group since mid to late-February so considering all of these as fresh calls is not really the case.  But a mere notion of $200/barrel is something that has many traders talking, and traders are using technical patterns and fear more and more right now.

Traders have been using oil and gold to hide out in to avoid the weakness in the U.S. Dollar.  If we see prices go that high, the United States will have to change the name of the currency to the US Peso.  We’ve already seen how OPEC is blaming the U.S. for current prices.  This would do wonders for Jim Cramer’s latest natural gas pick.

True die hard contrarians would be clamoring for this as an opportunity to sell, but being vocal about that right now would be no different than painting targets on their bodies head to toe.  In fact, finding any that are calling for the party to be over in oil is rather difficult.

Jon C. Ogg
March 7, 2008