Encore Energy Partners (NYSE:ENP) Downgraded on Being Fully Valued

Encore Energy Partners (NYSE:ENP) was downgraded by UBS (NYSE:UBS), with the company citing valuation as the major reason behind their decision.

UBS says, "Following a(n) - 8% run since the beginning of December, we are downgrading ENP to Neutral on valuation. While we acknowledge the beneficial impact of rising oil prices on ENP’s earnings and cash flows (-70% of ENP’s production is crude), the risk mitigation afforded by its recently enhanced hedge book, and the removal of the DNR overhang following VNR’s recent purchase of ENP’s GP, we believe the units present a balanced risk/reward profile at current levels.

"We believe Vanguard (NYSE:VNR) is likely to look to acquire the remaining -54% LP interest it does not own and merge ENP into VNR. While this combination would likely provide enhanced operational reach and cash flow stability, better opportunities for internal growth and bolt-on acquisitions, and the prospect of operational synergies, we believe the valuation must be sufficiently compelling to VNR to offset the loss of the GP and its Administrative Service Agreement."

UBS downgraded Encore Energy Partners (ENP) from "Buy" to "Neutral." Encore closed Friday at $22.01, up $0.01, or 0.05 percent. UBS has a price target of $22 on Encore.