Exhibit 99.1
Contango Announces Results for the Fiscal Year Ended June 30, 2003 and
Updates Operations
HOUSTON--(BUSINESS WIRE)--Sept. 16, 2003--Contango Oil & Gas
Company (AMEX:MCF) reported a net loss for the year ended June 30,
2003 of $4.9 million, or $0.54 per basic and diluted share, compared
to net income for the year ended June 30, 2002 of $6.0 million, or
$0.55 per basic share and $0.48 per diluted share. Total revenues for
the year ended June 30, 2003, after reflecting a loss of $5.7 million
from hedging activities, were $28.2 million. Total revenues for the
year ended June 30, 2002, after reflecting a gain of $5.0 million from
hedging activities, were $28.9 million. EBITDAX for the year ended
June 30, 2003 was $20.9 million, compared with $22.5 million for the
year ended June 30, 2002.
For the three months ended June 30, 2003, Contango had net income
of $1.2 million, or $0.13 per basic share and $0.11 per diluted share.
Total revenues for the three months ended June 30, 2003, after
reflecting a loss of $292,000 from hedging activities, were $8.8
million. EBITDAX for the three months ended June 30, 2003 was $7.1
million.
Total proved reserves as of June 30, 2003 were 21.2 billion cubic
feet of natural gas and 395,000 barrels of oil. The present value of
estimated future cash flows before income taxes as of June 30, 2003,
using prices of $5.23 per MMbtu of natural gas and $30.19 per barrel
of oil and discounted at 10% per annum, was $69.6 million. Proved
producing reserves represented 97% of total proved reserves.
Operations Update
Contango also announced that on September 12, 2003 it completed
the sale of some non-core reserves in Brooks County, Texas for $5.0
million. Proved reserves were 1.5 Bcfe and accounted for $5.0 million
of the Company's discounted present value at 10% per annum as of June
30, 2003. After the sale of these properties, the Company has $12.3
million of debt outstanding and $11.4 million of unused bank borrowing
capacity. Our current production rate following the sale of these
properties is 16,000 MMbtue per day. At today's commodity prices, the
Company expects EBITDAX of $1.5 to $2.0 million per month through
year-end 2003.
Kenneth R. Peak, Chairman and Chief Executive Officer, said, "The
increase in liquidity from this reserve sale comes at an opportune
time. We now have eight wells, five onshore and three offshore,
scheduled to begin drilling between now and year-end 2003. This is, by
far, the highest activity level in the Company's history."
"On our STEP properties, we will spud a Queen City development
well in September. We recently completed a 3-D seismic shoot in Jim
Hogg and Starr Counties, Texas and will drill an exploratory Queen
City well on this acreage in October 2003. If this play develops, we
would expect to drill another five to seven wells with drilling
expenditures in the $3.0 to $4.0 million range. We also have a shallow
oil exploratory prospect that we will drill in October. If this well
is successful, it could lead to another three to five wells."
"Our 3-D seismic shoot with Alta Resources in Duval County, Texas
is on schedule, and we expect to have our field work completed by
November 1, 2003. If the shoot is successful, we could be drilling
prospects by year-end. We are also going to participate with Alta
Resources in the drilling of a Queen City exploratory well in Jim Hogg
County. Drilling is expected to start in October 2003. If this play
develops, we would expect to drill another five to seven wells with
drilling expenditures in the $3.0 to $4.0 million range. Separately,
we currently are participating with a 7.1% working interest in a
15,500 foot Wilcox test in Goliad County, Texas."
Commenting on offshore activities, Mr. Peak said, "Contango,
Republic Exploration and Magnolia Offshore Exploration have farmed out
three "deep shelf" lease blocks. Magnolia's lease block is currently
drilling, and the other two farmout wells are expected to spud by
year-end 2003. Contango and its partially owned subsidiaries are fully
carried on all drilling and completion costs on these prospects."
Contango is a Houston-based, independent natural gas and oil
company. The Company explores, develops, produces and acquires natural
gas and oil properties primarily onshore in the Gulf Coast and
offshore in the Gulf of Mexico. Contango also owns a 10% partnership
interest in a proposed LNG terminal in Freeport, Texas. Additional
information can be found on our web page at www.mcfx.biz.
This press release contains forward-looking statements that
involve risks and uncertainties, and actual events or results may
differ materially from Contango's expectations. The statements reflect
Contango's current views with respect to future events that involve
risks and uncertainties, including those 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 Contango's publicly available reports
filed with the Securities and Exchange Commission.
CONTANGO OIL & GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended June 30,
-------------------------
2003 2002
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REVENUES:
Natural gas and oil sales $33,919,126 $23,901,995
Gain (loss) from hedging activities (5,708,958) 5,016,173
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Total revenues 28,210,168 28,918,168
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EXPENSES:
Operating expenses 5,736,454 3,904,541
Exploration expenses 17,922,116 2,694,425
Depreciation, depletion and amortization 8,787,794 8,593,635
Impairment of natural gas and oil
properties 181,610 527,150
General and administrative expense 2,063,503 2,901,566
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Total expenses 34,691,477 18,621,317
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INCOME (LOSS) FROM OPERATIONS (6,481,309) 10,296,851
Interest expense (710,587) (285,159)
Interest income 30,359 194,905
Gain on sale of assets and other 490,730 373,539
------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES (6,670,807) 10,580,136
(Provision) benefit for income taxes 2,334,782 (4,003,154)
------------ ------------
NET INCOME (LOSS) (4,336,025) 6,576,982
Preferred stock dividends 600,000 600,000
------------ ------------
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON
STOCK $(4,936,025) $5,976,982
============ ============
NET INCOME (LOSS) PER SHARE:
Basic $(0.54) $0.55
============ ============
Diluted $(0.54) $0.48
============ ============
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
Basic 9,129,169 10,841,665
============ ============
Diluted 9,129,169 13,711,597
============ ============
CONTANGO OIL & GAS COMPANY AND SUBSIDIARIES
OPERATING AND FINANCIAL STATISTICS
Year Ended June 30,
-------------------------
2003 2002
------------ ------------
Production:
Natural gas (thousand cubic feet) 6,016,395 6,981,909
Oil and condensate (barrels) 138,569 186,274
Total (thousand cubic feet equivalent) 6,847,809 8,099,553
Natural gas (per thousand cubic feet per
day) 16,483 19,129
Oil and condensate (per barrels per day) 380 510
Total (per thousand cubic feet equivalent
per day) 18,763 22,189
Average sales price:
Natural gas (thousand cubic feet) $5.00 $2.94
Oil and condensate (barrels) $27.90 $21.44
Total (thousand cubic feet equivalent) $4.95 $3.03
Selected data per Mcfe:
Production and severance taxes $0.35 $0.20
Lease operating expense $0.48 $0.28
General and administrative expense $0.30 $0.36
Depreciation, depletion and amortization
of natural gas and oil properties $1.24 $1.05
EBITDAX (1) $20,900,941 $22,485,600
(1) EBITDAX represents earnings before interest, income taxes,
depreciation, depletion and amortization, impairment expenses,
exploration expenditures, including gain (loss) from hedging
activities. We have reported EBITDAX because we believe EBITDAX is
a measure commonly reported and widely used by investors as an
indicator of a company's operating performance and ability to
incur and service debt. We believe EBITDAX assists investors in
comparing a company's performance on a consistent basis without
regard to depreciation, depletion and amortization, impairment of
natural gas and oil properties and exploration expenses, which can
vary significantly depending upon accounting methods. EBITDAX is
not a calculation based on the U.S. generally accepted accounting
principles and should not be considered an alternative to net
income (loss) in measuring our performance or used as an exclusive
measure of cash flow because it does not consider the impact of
working capital growth, capital expenditures, debt principal
reductions and other sources and uses of cash, which are disclosed
in our statements of cash flows. Investors should carefully
consider the specific items included in our computation of
EBITDAX. While we have disclosed our EBITDAX to permit a more
complete comparative analysis of our operating performance and
debt servicing ability relative to other companies, investors
should be cautioned that EBITDAX as reported by us may not be
comparable in all instances to EBITDAX as reported by other
companies. EBITDAX amounts may not be fully available for
management's discretionary use, due to requirements to conserve
funds for capital expenditures, debt service, preferred stock
dividends and other commitments.
CONTACT: Contango Oil & Gas Company
Kenneth R. Peak, 713-960-1901
www.mcfx.biz