Vanguard Natural Resources, LLC and Encore Energy Partners LP Announce Merger Agreement

Houston, Texas (July 11, 2011) — Vanguard Natural Resources, LLC (NYSE: VNR) (“Vanguard”) and Encore Energy Partners LP (NYSE: ENP) (“Encore”) today announced the execution of a definitive agreement that would result in a merger whereby Encore would become a wholly-owned subsidiary of Vanguard’s operating company, Vanguard Natural Gas, LLC, through a unit-for-unit exchange. Under the terms of the definitive agreement, Encore’s public unitholders would receive 0.75 Vanguard common units in exchange for each Encore common unit they own at closing, representing a premium of approximately 4.4% based on the closing prices of Encore common units and Vanguard common units on March 24, 2011, the last trading day before Vanguard announced its initial proposal to acquire all of the common units of Encore owned by the public and an approximately 51% premium over the December 31, 2010 purchase price paid to Denbury Resources, Inc. (NYSE: DNR) for 45.6% of the Encore common units. The transaction would result in approximately 18.4 million additional common units being issued by Vanguard. The terms of the definitive agreement were unanimously approved by the members of the Encore Conflicts Committee, who negotiated the terms on behalf of Encore and is comprised solely of independent directors. In addition, Jefferies & Company, Inc., has issued a fairness opinion to the Encore Conflicts Committee stating that they believe the exchange ratio is fair, from a financial point of view, to the unaffiliated unitholders of Encore. The members of the Vanguard Conflicts Committee, which is also comprised solely of independent directors, negotiated the terms on behalf of Vanguard and also voted unanimously in favor of the merger. In addition, RBC Capital Markets has issued a fairness opinion to the Vanguard Conflicts Committee stating that they believe the exchange ratio is fair, from a financial point of view, to Vanguard.
“We are pleased to announce our agreement to combine these two companies in a transaction that would simplify our commercial activities and organizational structure as well as lower our overall cost of capital” said Scott W. Smith, president and chief executive officer of Vanguard.
The merger is expected to provide benefits to current Vanguard unitholders by, among other things:
streamlining Vanguard’s organizational structure, which enhances transparency for investors, while also reducing operating complexity and the company’s overall cost of capital;
creating an enterprise of significantly increased size and scale, improved overall operating reach and greater cash flow stability;
realizing meaningful cost synergies primarily from eliminating public company expenses associated with Encore;
expanding geographic reach and diversification from an operational and employee perspective, which should improve Vanguard’s ability to compete more aggressively for future acquisitions; and
maintaining Vanguard’s strong credit profile and liquidity position by completing the merger on the basis of an all-equity, unit-for-unit exchange.
“We fully support the combination of these two successful companies,” said John Jackson, chairman of the Encore Conflicts Committee. “We believe Encore’s public unitholders will benefit from Vanguard’s future growth potential.”
The merger is expected to benefit Encore’s public unitholders by, among other things:
providing Encore unitholders with a premium of approximately 4.4% through the exchange of 0.75 Vanguard common units for each Encore common unit based on the closing prices of Encore and Vanguard common units on March 24, 2011, the last trading day before Vanguard announced its initial proposal to acquire all of the common units of Encore owned by the public and an approximately 51% premium over the December 31, 2010 purchase price Vanguard paid to Denbury Resources, Inc. for 45.6% of the Encore common units;

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