Encore Acquisition 8-K/A Financial Statements and Exhibits

Exhibit 99.4

ENCORE ACQUISITION COMPANY

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
INTRODUCTION

     Encore Acquisition Company (“Encore”), a Delaware corporation, acquires and develops oil and natural gas reserves from onshore fields in the United States. Since 1998, it has acquired producing properties with proven reserves and leasehold acreage and grown the production and proven reserves by drilling, exploring, reengineering or expanding existing waterflood projects, and by applying tertiary recovery techniques.

     On January 16, 2007, Encore entered into a Purchase and Sale Agreement (the “Agreement”) to acquire certain oil and natural gas properties in the Big Horn Basin of Wyoming (“Big Horn”) from certain subsidiaries of Anadarko Petroleum Corporation (“Anadarko”). Big Horn is comprised of assets in or near the Elk Basin field (“Elk Basin”) in Park County, Wyoming and Carbon County, Montana and the Gooseberry field (“Gooseberry”) in Park County, Wyoming.

     The accompanying unaudited pro forma consolidated financial statements should be read together with the historical audited consolidated financial statements of Encore included in its Annual Report on Form 10-K for the year ended December 31, 2006 and the unaudited consolidated financial statements of Encore included in its Quarterly Report on Form 10-Q for the three months ended March 31, 2007. The accompanying unaudited pro forma consolidated financial statements were derived by making certain adjustments to the historical financial statements of Encore. The adjustments are based on currently available information and certain estimates and assumptions. Therefore, the actual adjustments may differ from the unaudited consolidated pro forma adjustments. However, management believes that the assumptions provide a reasonable basis for presenting the significant effects of the transactions as contemplated and that the unaudited consolidated pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma consolidated financial statements.

     The accompanying unaudited consolidated pro forma financial statements give effect to the acquisition of Big Horn by Encore. The unaudited consolidated pro forma balance sheet assumes that the acquisition and related transactions occurred on December 31, 2006, the unaudited pro forma consolidated statement of operations for the year ended December 31, 2006 assumes that the acquisition and related transactions occurred on January 1, 2006, and the unaudited pro forma consolidated statement of operations for the three months ended March 31, 2007 assumes that the acquisition and related transactions occurred on January 1, 2007.

     The Big Horn acquisition was completed on March 7, 2007 and accordingly, the actual operating results related to the acquired properties are included in Encore’s operating results from that date forward.

ENCORE ACQUISITION COMPANY

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2006
(in thousands, except share and per share amounts)

				Big Horn Acquisition
				Gooseberry			Elk Basin
	Encore			Pro Forma			Pro Forma			Pro Forma
	Historical			Adjustments			Adjustments			as Adjusted
ASSETS
Current assets:
Cash and cash equivalents	$	763		$	—		$	—		$	763
Accounts receivable		81,470			214	(a)		1,020	(a)		82,704
Inventory		18,170			—			—			18,170
Derivatives		17,349			—			—			17,349
Deferred taxes		24,978			—			—			24,978
Prepaid expenses		2,988			—			—			2,988
Total current assets		145,718			214			1,020			146,952
Properties and equipment, at cost:
Proved properties, including wells and related equipment		2,033,914			64,356	(a)		340,018	(a)		2,438,288
Unproved properties		47,548			—			—			47,548
Accumulated depletion, depreciation, and amortization		(364,780	)		—			—			(364,780	)
		1,716,682			64,356			340,018			2,121,056
Other property and equipment		18,231			—			—			18,231
Accumulated depreciation		(7,791	)		—			—			(7,791	)
Total other property and equipment		10,440			—			—			10,440
Other assets:
Goodwill		60,606			—			—			60,606
Derivatives		40,715			—			—			40,715
Other		32,739			1,309	(b)		6,914	(b)		40,962
Total other assets		134,060			1,309			6,914			142,283
Total assets	$	2,006,900		$	65,879		$	347,952		$	2,420,731
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	18,204		$	—		$	—		$	18,204
Accrued lease operations expense		8,582			5	(a)		240	(a)		8,827
Accrued development capital		44,492			—			—			44,492
Accrued interest		11,273			—			—			11,273
Accrued production, ad valorem, and severance taxes		10,915			65	(a)		2,280	(a)		13,260
Accrued oil purchases		11,191			—			—			11,191
Derivatives		60,448			—			—			60,448
Other		21,358			7	(a)		300	(a)		21,665
Total current liabilities		186,463			77			2,820			189,360
Long-term debt		661,696			64,416	(a)		328,659	(a)		1,062,994
					1,309	(b)		6,914	(b)
Deferred taxes		282,825			—			—			282,825
Derivatives		38,688			—			—			38,688
Future abandonment cost		19,205			77	(a)		9,559	(a)		28,841
Other		1,158			—			—			1,158
Total liabilities		1,190,035			65,879			347,952			1,603,866
Stockholders’ equity:
Preferred stock, $.01 par value, 5,000,000 authorized, none issued and outstanding		—			—			—			—
Common stock, $.01 par value, 144,000,000 authorized, 53,028,866 issued and outstanding		531			—			—			531
Additional paid-in capital		457,201			—			—			457,201
Treasury stock, at cost, of 17,809 shares		(457	)		—			—			(457	)
Retained earnings		394,917			—			—			394,917
Accumulated other comprehensive loss		(35,327	)		—			—			(35,327	)
Total stockholders’ equity		816,865			—			—			816,865
Total liabilities and stockholders’ equity	$	2,006,900		$	65,879		$	347,952		$	2,420,731

The accompanying notes are an integral part of these unaudited pro forma consolidated financial statements.

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ENCORE ACQUISITION COMPANY

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2006
(in thousands, except per share amounts)

				Big Horn Acquisition
	Encore			Gooseberry		Elk Basin		Pro Forma			Pro Forma
	Historical			Historical		Historical		Adjustments			as Adjusted
Revenues
Oil	$	346,974		$	12,365	$	63,695	$	—		$	423,034
Natural gas		146,325			—		2,395		—			148,720
Marketing and other		147,563			—		3,649		—			151,212
Total revenues		640,862			12,365		69,739		—			722,966
Expenses
Production:
Lease operations		98,194			3,593		7,435		—			109,222
Production, ad valorem, and severance taxes		49,780			1,625		7,839		—			59,244
Depletion, depreciation, and amortization		113,463			—		—		34,835	(c)		148,298
Exploration		30,519			—		—		—			30,519
General and administrative		23,194			—		—		3,290	(d)		26,484
Marketing		148,571			—		—		—			148,571
Derivative fair value gain		(24,388	)		—		—		—			(24,388	)
Other operating		10,023			—		5,598		—			15,621
Total expenses		449,356			5,218		20,872		38,125			513,571
Operating income (loss)		191,506			7,147		48,867		(38,125	)		209,395
Other income (expenses)
Interest		(45,131	)		—		—		(18,058	)(e)		(64,834	)
									(1,645	)(f)
Other		1,429			—		—		—			1,429
Total other income (expenses)		(43,702	)		—		—		(19,703	)		(63,405	)
Income (loss) before income taxes		147,804			7,147		48,867		(57,828	)		145,990
Income tax benefit (provision)		(55,406	)		—		—		680	(g)		(54,726	)
Net income (loss)	$	92,398		$	7,147	$	48,867	$	(57,148	)	$	91,264
Net income per common share:
Basic	$	1.78									$	1.76
Diluted	$	1.75									$	1.73
Weighted average common shares outstanding:
Basic		51,865										51,865
Diluted		52,736										52,736

The accompanying notes are an integral part of these unaudited pro forma consolidated financial statements.

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ENCORE ACQUISITION COMPANY

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2007
(in thousands, except per share amounts)

				Big Horn Acquisition
	Encore			Gooseberry			Elk Basin			Pro Forma			Pro Forma
	Historical			Historical			Historical			Adjustments			as Adjusted
Revenues
Oil	$	82,623		$	2,024		$	10,459		$	—		$	95,106
Natural gas		32,978			—			127			—			33,105
Marketing and other		14,941			—			3,575			—			18,516
Total revenues		130,542			2,024			14,161			—			146,727
Expenses
Production:
Lease operations		30,520			307			1,965			—			32,792
Production, ad valorem, and severance taxes		12,515			260			1,262			—			14,037
Depletion, depreciation, and amortization		35,028			—			—			5,683	(c)		40,711
Exploration		11,521			—			—			—			11,521
General and administrative		7,360			—			—			644	(d)		8,004
Marketing		15,011			—			2,739			—			17,750
Derivative fair value loss		45,614			—			—			—			45,614
Other operating		2,565			—			631			—			3,196
Total expenses		160,134			567			6,597			6,327			173,625
Operating income (loss)		(29,592	)		1,457			7,564			(6,327	)		(26,898	)
Other income (expenses)
Interest		(16,287	)		—			—			(6,912	)(e)		(23,610	)
											(411	)(f)
Other		431			—			—			—			431
Total other income (expenses)		(15,856	)		—			—			(7,323	)		(23,179	)
Income (loss) before income taxes		(45,448	)		1,457			7,564			(13,650	)		(50,077	)
Income tax benefit (provision)		16,019			(546	)		(2,837	)		5,119	(g)		17,755
Net income (loss)	$	(29,429	)	$	911		$	4,727		$	(8,531	)	$	(32,322	)
Net loss per common share:
Basic	$	(0.55	)										$	(0.61	)
Diluted	$	(0.55	)										$	(0.61	)
Weighted average common shares outstanding:
Basic		53,077												53,077
Diluted		53,077												53,077

The accompanying notes are an integral part of these unaudited pro forma consolidated financial statements.

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ENCORE ACQUISITION COMPANY

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Basis of Presentation

     The historical financial information is derived from the historical consolidated financial statements of Encore. The unaudited pro forma balance sheet as of December 31, 2006 has been prepared as if the acquisition and related transactions had taken place on December 31, 2006. The unaudited pro forma statement of operations for the three months ended March 31, 2007 assumes that the acquisition and related transactions occurred on January 1, 2007. The unaudited pro forma statement of operations for the year ended December 31, 2006 assumes that the acquisition and related transactions occurred on January 1, 2006.

Note 2. Pro Forma Assumptions and Adjustments

	We made the following adjustments in the preparation of the unaudited pro forma financial statements:
a)	To record the acquisition of Big Horn for $393.1 million (including estimated merger costs of approximately $1.0 million) financed with borrowings under Encore’s revolving credit facilities. The allocation of the purchase price to the assets acquired and liabilities assumed is preliminary and, therefore, subject to change. Any future adjustments to the allocation of the purchase price are not expected to have a material effect on Encore’s financial condition, results of operations, or cash flows.
	The calculation of the total purchase price and the allocation to the fair value of the Big Horn Basin assets acquired and liabilities assumed from Anadarko are as follows (in thousands):

Calculation of total purchase price:
Cash paid to Anadarko	$	392,085
Estimated transaction costs		990
Total purchase price	$	393,075
Allocation of purchase price to the fair value of net assets acquired:
Accounts receivable	$	1,234
Properties and equipment		404,374
Total assets acquired		405,608
Accrued liabilities		(2,897	)
Future abandonment cost		(9,636	)
Total liabilities assumed		(12,533	)
Fair value of net assets acquired	$	393,075

b)	Reflects the payment of debt issuance costs of $8.2 million incurred on Encore’s revolving credit facilities allocated to Gooseberry and Elk Basin based on percentage of total properties and equipment.
c)	Reflects the adjustment of additional depletion, depreciation, and amortization of oil and natural gas properties associated with the Big Horn purchase price allocation. Certain plant and pipeline equipment is depreciated on a straight-line basis over estimated useful lives, which range from three to ten years. The remaining capitalized costs are amortized on a unit-of-production basis over the remaining life of total proved developed reserves or proved reserves, as applicable.
d)	Reflects the incremental general and administrative expenses we estimate would have been incurred had we purchased the properties on the first day of the period presented.
e)	Reflects estimated incremental interest expense associated with borrowings under Encore’s revolving credit facilities to acquire Big Horn. We assume none of that debt is paid off during the periods covered in the unaudited pro forma consolidated statements of operations. If the LIBOR rate increased 1/8%, we would incur an additional $0.5 million in interest expense for the year ended December 31, 2006, and if the rate decreased 1/8%, we would incur $0.5 million less. If the LIBOR rate increased 1/8%, we would incur an additional $0.1 million in interest expense for the quarter ended March 31, 2007, and if the rate decreased 1/8%, we would incur $0.1 million less.

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ENCORE ACQUISITION COMPANY

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

f)	Reflects the amortization of debt issuance costs incurred on Encore’s revolving credit facilities.
g)	Reflects estimated income tax provision associated with the operating income of Big Horn and the pro forma adjustments using a 38.5% and 37.5% effective tax rate for the three months ended March 31, 2007 and for the year ended December 31, 2006, respectively.

Note 3. Pro Forma Earnings (Loss) Per Share

     The following table reflects the pro forma earnings (loss) per share data for the periods indicated:

	Three Months
	Ended			Year Ended
	March 31,			December 31,
	2007			2006
	(in thousands, except per share data)
Numerator:
Pro forma net income (loss)	$	(32,322	)	$	91,264
Denominator:
Denominator for basic EPS:
Weighted average shares outstanding		53,077			51,865
Effect of dilutive options and diluted restricted stock (a)		—			871
Denominator for diluted EPS		53,077			52,736
Pro forma net income (loss) per common share:
Basic	$	(0.61	)	$	1.76
Diluted	$	(0.61	)	$	1.73

(a) Options to purchase 1,498,202 shares and 190,406 shares of common stock were outstanding but not included in the above calculation of EPS for the three months ended March 31, 2007 and for the year ended December 31, 2006, respectively, because their effect would be antidilutive.

Note 4. Oil & Natural Gas Producing Activities

     There are numerous uncertainties inherent in estimating quantities of proved reserves and in projecting future rates of production and timing of development expenditures. Oil and natural gas reserve engineering is and must be recognized as a subjective process of estimating underground accumulations of oil and natural gas that cannot be measured in any exact way, and estimates of other engineers might differ materially from those included herein. The accuracy of any reserve estimate is a function of the quality of available data and engineering, and estimates may justify revisions. Accordingly, reserve estimates are often materially different from the quantities of oil and natural gas that are ultimately recovered. Reserve estimates are integral to management’s analysis of impairments of oil and natural gas properties and the calculation of depletion, depreciation, and amortization on these properties.

     Estimated pro forma net quantities of proved oil and natural gas reserves are as follows as of December 31, 2006:

	Encore		Big Horn Acquisition				Total
	Historical		Gooseberry		Elk Basin		Pro Forma
Proved reserves:
Oil (MBbl)		153,434		2,279		14,470		170,183
Natural gas (MMcf)		306,764		—		3,726		310,490
Combined (MBOE)		204,561		2,279		15,091		221,931
Proved developed reserves:
Oil (MBbl)		94,246		1,691		12,789		108,726
Natural gas (MMcf)		235,049		—		2,975		238,024
Combined (MBOE)		133,421		1,691		13,285		148,397

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ENCORE ACQUISITION COMPANY

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

     The changes in pro forma proved reserves were as follows for 2006:

										Big Horn Acquisition
	Encore Historical									Gooseberry								Elk Basin									Total Pro Forma
				Natural			Oil						Natural		Oil						Natural			Oil						Natural			Oil
	Oil			Gas			Equivalent			Oil			Gas		Equivalent			Oil			Gas			Equivalent			Oil			Gas			Equivalent
	(MBbl)			(MMcf)			(MBOE)			(MBbl)			(MMcf)		(MBOE)			(MBbl)			(MMcf)			(MBOE)			(MBbl)			(MMcf)			(MBOE)
Balance, December 31, 2005		148,387			283,865			195,698			4,120			—		4,120			18,155			7,663			19,433			170,662			291,528			219,251
Acquisitions of minerals-in-place		25			235			64			—			—		—			—			—			—			25			235			64
Extensions and discoveries		3,269			78,861			16,412			—			—		—			—			—			—			3,269			78,861			16,412
Improved recovery		10,935			941			11,092			—			—		—			—			—			—			10,935			941			11,092
Revisions of estimates		(1,847	)		(33,682	)		(7,461	)		755			—		755			(2,419	)		(3,575	)		(3,016	)		(3,511	)		(37,257	)		(9,722	)
Production		(7,335	)		(23,456	)		(11,244	)		(271	)		—		(271	)		(1,266	)		(362	)		(1,326	)		(8,872	)		(23,818	)		(12,841	)
Balance, December 31, 2006		153,434			306,764			204,561			4,604			—		4,604			14,470			3,726			15,091			172,508			310,490			224,256

     Reserves for the Big Horn Acquisition as of December 31, 2005 as shown in the table above are derived from unaudited footnotes to the Statements of Revenues and Direct Operating Expenses of the Anadarko Elk Basin Operations and the Anadarko Gooseberry Operations. Reserves for the Big Horn Acquisition as of December 31, 2006 as shown in the table above were estimated by our internal engineering staff. These amounts differ from the reserves at December 31, 2006 included in the unaudited footnotes to the Statements of Revenues and Direct Operating Expenses of the Anadarko Elk Basin Operations and the Anadarko Gooseberry Operations. There are numerous uncertainties inherent in estimating quantities of proved reserves. Oil and natural gas reserve engineering is and must be recognized as a subjective process of estimating underground accumulations of oil and natural gas that cannot be measured in any exact way, and estimates of different engineers often differ materially based on the judgment of the engineer performing the estimate. The accuracy of any reserve estimate is a function of the quality of available data and engineering, and estimates may justify revisions. Management believes both estimates represent valid estimates and no attempt has been made to reconcile the different estimates as they are based on the judgment of different engineers. The amount by which these two amounts differ has been included as a revision of quantity estimates in the above table.

     The pro forma standardized measure of discounted estimated future net cash flows was as follows as of December 31, 2006:

				Big Horn Acquisition
	Encore Historical			Gooseberry			Elk Basin			Total Pro Forma
	(in thousands)
Net future cash inflows	$	9,291,007		$	226,918		$	720,499		$	10,238,424
Future production costs		(3,803,000	)		(90,774	)		(269,087	)		(4,162,861	)
Future development costs		(371,396	)		(4,800	)		(18,107	)		(394,303	)
Future income tax expense		(1,499,290	)		(23,519	)		(33,565	)		(1,556,374	)
Future net cash flows		3,617,321			107,825			399,740			4,124,886
10% annual discount		(2,155,514	)		(60,607	)		(171,072	)		(2,387,193	)
Standardized measure of discounted estimated future net cash flows	$	1,461,807		$	47,218		$	228,668		$	1,737,693

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ENCORE ACQUISITION COMPANY

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

     The primary changes in the pro forma standardized measure of discounted estimated future net cash flows were as follows for 2006:

				Big Horn Acquisition
	Encore Historical			Gooseberry			Elk Basin			Total Pro Forma
	(in thousands)
Standardized measure, beginning of year	$	1,918,471		$	40,179		$	190,559		$	2,149,209
Net change in sales price and production costs		(634,033	)		10,270			194,524			(429,239	)
Acquisitions of minerals-in-place		539			—			—			539
Extensions, discoveries, and improved recovery		141,211			—			—			141,211
Revisions of quantity estimates		(62,615	)		12,928			(90,751	)		(140,438	)
Sales, net of production costs		(340,036	)		(4,640	)		(47,530	)		(392,206	)
Development costs incurred during the year		253,484			772			1,610			255,866
Accretion of discount		191,847			4,018			19,056			214,921
Change in estimated future development costs		(185,212	)		(2,992	)		(2,758	)		(190,962	)
Net change in income taxes		248,491			4,986			(18,036	)		235,441
Change in timing and other		(70,340	)		(18,303	)		(18,006	)		(106,649	)
Standardized measure, end of year	$	1,461,807		$	47,218		$	228,668		$	1,737,693

     The changes in standardized measure in the above table for the Big Horn Acquisition differ from the amounts disclosed in the unaudited footnotes to the Statements of Revenues and Direct Operating Expenses of the Anadarko Elk Basin Operations and the Anadarko Gooseberry Operations due to differences in estimated proved reserves at December 31, 2006 as described above.

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