EXHIBIT 99.1
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CONTANGO OIL & GAS COMPANY
NEWS RELEASE
Contango Oil & Gas Company Announces a Third Reserve Acquisition in South Texas
MARCH 8, 2002 - HOUSTON, TEXAS - Contango Oil & Gas Company (AMEX:MCF)
announced today that it has further increased its ownership interest in its core
South Texas Exploration Property (STEP). The $7.0 million acquisition, effective
January 1, 2002, purchased an estimated 4.2 Bcfe of proved developed producing
reserves for approximately $1.49/Mmbtue. The acquisition is being funded with
cash on hand and increased availability under an expanded $20 million secured
oil and gas revolving credit facility provided by Guaranty Bank.
Kenneth R. Peak, Chairman and Chief Executive Officer, said, "In the last
60 days, we have completed acquisitions at our core south Texas properties
totaling $20 million. The all in economics of these acquisitions are 11.3 Bcfe
of proved developed producing reserves at a cost of $1.75 per Mcfe, or $1.56 per
Mmbtue. As a result of these acquisitions, we now have an approximate 67%
working interest and a 50% net revenue interest in our STEP reserves. Including
these purchased reserves as of the date of the acquisition, January 1, 2002, the
Company has approximately 30 Bcfe (32.1 Mmbtue) of proved developed producing
properties at STEP."
Mr. Peak further said, "We unwound all of our hedges on February 21 for a
profit this fiscal year of approximately $4.4 million. We believe that natural
gas prices have likely bottomed, and the risk/reward tradeoff now favors being
unhedged. Our projected capital expenditures for the remaining four months of
the fiscal year ending June 30, 2002 are estimated at $5-8 million. This is in
line with our anticipated cash flow from operations, thus our debt, which
currently stands at $9.8 million, will likely remain at that level through this
fiscal year."
Contango is a Houston-based, independent natural gas and oil company. The
Company explores and acquires natural gas and oil properties primarily onshore
in the Gulf Coast, offshore Gulf of Mexico and the Rocky Mountains. Additional
information can be found on our web page at www.contango-oandg.com.
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This news release contains forward-looking statements within the meaning of
the Securities Litigation Reform Act. The statements reflect the company's
current views with respect to future events that involve risks and uncertainties
including uncertainties related to successful negotiations with other parties,
oil and gas exploration risks, price volatility, production levels, closing of
transactions, capital availability, operational and other risks, uncertainties
and factors described from time to time in the company's publicly available SEC
reports. In light of these risks and uncertainties, the forward-looking events
described in this release might not occur.
Contango Oil & Gas Company For information, contact:
3700 Buffalo Speedway, Suite 960 Kenneth R. Peak
Houston, Texas 77098 (713) 960-1901
www.contango-oandg.com
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