UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) January 4, 2002
CONTANGO OIL & GAS COMPANY
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 000-24971 95-4079863
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
3700 BUFFALO SPEEDWAY, SUITE 960
HOUSTON, TEXAS 77098
(Address of principal executive offices)
(713) 960-1901
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report.)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Contango Oil & Gas Company entered into an Asset Purchase Agreement with
Juneau Exploration L.P. to purchase all of the working and revenue interests of
Juneau Exploration L.P. in the Company's South Texas Exploration Program (STEP)
properties effective as of January 1, 2002. The sole manager of Juneau
Exploration L.P. is John B. Juneau, one of our directors.
Contango paid approximately $11 million in cash and funded the acquisition
with cash on hand and increased availability under an expanded $17 million
secured oil and gas revolving credit facility provided by Guaranty Bank, FSB.
Contango also expects to close an additional $4 million acquisition of STEP
proved developed producing reserves in two separate transactions scheduled for
April and July of 2002. The actual acquisition prices for the later two closings
will be based on natural gas and crude prices in effect at the time of the
anticipated April and July closings.
Contango acquired Juneau Exploration's interests in 22 onshore producing
oil and gas wells located in Jim Hogg and Brooks Counties, Texas. The net proved
developed producing reserves of natural gas and oil for the acquired properties
as of January 1, 2002 are estimated to be approximately 6.1 Bcfe (6.9 MMbtue).
As a result of this acquisition, the Company's working and net revenue interest
in these wells was increased from approximately 45% and 32% to approximately 56%
and 42%, respectively. Current daily production has increased from approximately
15 Mcfe to 20 Mcfe. The acquisition price is based on the monthly NYMEX prices
for natural gas and oil as of January 4, 2002, adjusted for basis, btu and
transportation differentiations, with cash flows discounted at 10%.
Within the 75 days of the acquisition, Contango will file an audited
statement of revenues and direct operating expenses, along with the oil and gas
reserve disclosures, which will provide historical information with the respect
to the acquired properties. The Company will also file unaudited pro forma
condensed consolidated financial statements and related notes.
A copy of the press release issued by Contango on January 8, 2002
concerning the acquisition is attached hereto as Exhibit 99.1 and is
incorporated herein by reference.
ITEM 5. OTHER EVENTS
During December 2001 and January 2002, Contango closed a significant
portion of its 2002 and 2003 natural gas swap contracts, which resulted in
approximately $2.4 million of realized gains for the period from October 1, 2001
through January 14, 2001. Previously in the fiscal first quarter ending
September 30, 2001, the Company recognized approximately $2.8 million in
realized gains from hedging activities. As a result, Contango's realized gains
from hedging activities for its 2002 fiscal year to date are $5.2 million. Our
hedging activities significantly improved our earnings and cash position during
the period presented. The Company currently has 8,000 MMbtud hedged at $2.725
per MMbtu for the months of February 2002 through December 2003.
This Form 8-K includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The opinions, forecasts,
projections or other statements, other than
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statements of historical fact, are forward-looking statements. Although
Contango believes that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such expectations will
prove to have been correct. Certain risk and uncertainties inherent in
Contango's business are set forth in the filing of Contango with the Securities
and Exchange Commission.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
The following is a list of exhibits filed as part of this Form 8-K. Where
so indicated by footnote, exhibits, which were previously filed, are
incorporated by reference.
Exhibit No. Description of Document
- ----------- ---------------------------------------------------
10.1 Asset Purchase Agreement by and among Juneau Exploration, L.P.
and Contango Oil and Gas Company dated January 4, 2002,
10.2 First Amendment dated as of January 8, 2002 to Credit
Agreement between Contango Oil and Gas Company and Guaranty
Bank, FSB dated June 29, 2001,
99.1 Press Release issued January 8, 2002.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CONTANGO OIL & GAS COMPANY
Date: January 18, 2002 By: /s/ KENNETH R. PEAK
-------------------------------------
Kenneth R. Peak
President and Chief Executive Officer
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