Exhibit 99.1

    Contango Announces Sale of Gulf of Mexico Producing Properties

    HOUSTON--(BUSINESS WIRE)--Dec. 9, 2003--Contango Oil & Gas Company
(AMEX:MCF) announced that the Company and its 33.3%-owned subsidiary,
Republic Exploration LLC, have entered into an agreement to sell all
of their currently producing Gulf of Mexico leases to private
interests for approximately $12.0 million. Contango will receive
approximately $4.7 million in cash proceeds, representing $3.7 million
from the sale of its direct interests in the properties, plus an
additional $1.0 million distribution from its 33.3%-owned subsidiary,
Republic Exploration. Republic Exploration will receive approximately
$8.3 million cash proceeds from the sale of its interests in these
properties from which it will pay a $1.0 million distribution to each
of its three members. After payment of these distributions and
including cash already on hand, Republic Exploration will have total
cash of approximately $8.6 million. These funds will be available for
future lease acquisitions and exploration drilling. Contango and
Republic Exploration will receive payment prior to Dec. 31, 2003. In
connection with this sale, Contango Oil & Gas Company will recognize
an approximate $6.5 million gain on sale of assets on its income
statement for the three months ending Dec. 31, 2003.
    Kenneth R Peak, Contango's chairman and chief executive officer,
said, "As a result of this sale, we have now recaptured our entire
investment in Republic Exploration. This sale, together with our
earlier property sale in July 2003, represents approximately $9.7
million in cash proceeds to Contango. We will use the proceeds of this
most recent sale to reduce our bank debt to approximately $10.0
million. This compares to bank debt of approximately $22.4 million as
recently as June 30, 2003. After debt repayment, our unused
availability under our bank line will be approximately $11.0 million.
Based on current product pricing, our monthly EBITDAX is projected to
average around $1.5 million per month through our third fiscal quarter
ending March 31, 2004."
    Mr. Peak added, "We are completing our Queen City prospect in Jim
Hogg County, Texas. It is too early to know the commercial viability
of this well. Our other four onshore prospects are proceeding on
schedule. Republic Exploration's Vermilion 73 deep shelf prospect in
the Gulf of Mexico is currently drilling."
    EBITDAX represents earnings before interest, income taxes,
depreciation, depletion and amortization, impairment expenses,
exploration expenses, including gain (loss) from hedging activities
and sale of assets. 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 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.
    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.

    CONTACT: Contango Oil & Gas Company, Houston
             Kenneth R. Peak, 713-960-1901
             www.mcfx.biz