Exhibit 99.1

Contango Announces Private Placement of $8.0 Million of Convertible
Preferred Stock

    HOUSTON--(BUSINESS WIRE)--Dec. 15, 2003--Contango Oil & Gas
Company (AMEX:MCF) announced today that it has sold in a private
transaction $8.0 million of its Series C Preferred Stock. The shares
were purchased by a group of private institutional investors. The
Series C Preferred Stock is perpetual and is convertible at any time
into shares of Contango common stock at a price of $6.00 per share.
The dividend on the Series C Preferred Stock can be paid quarterly in
cash at a rate of 6.0% per annum or paid-in-kind at a rate of 7.5% per
annum. The Company has agreed to file a shelf registration covering
the common shares issuable upon conversion of the Series C Preferred
Stock.
    The Company will use the net proceeds of this offering to repay
indebtedness under its bank revolving credit facility. Thereafter, it
intends to use the additional funds made available under its bank
credit facility, together with cash flow from operations, to fund
natural gas and oil exploration, development and production, to fund
offshore lease acquisitions, to fund 3-D seismic shoots and
acquisitions, to fund the Company's investment in its proposed
Freeport, Texas LNG receiving terminal and for general corporate
purposes. Energy Capital Solutions, LLC acted as the placement agent
for this offering.
    Kenneth R Peak, Contango's chairman and chief executive officer
said, "As a result of this financing and our recent offshore property
sale, we expect our 2003 year-end debt level to be approximately $2.0
million, versus our available bank line of $20.0 million. We have five
onshore exploration prospects we are pursuing, any one of which could
lead to a multi-well development program. In our Gulf of Mexico
offshore exploration efforts, our 33.3% owned subsidiary, Republic
Exploration LLC ("REX"), expects to have approximately $8.6 million of
capital available for lease sales and exploration. Contango also now
has the capital available to more aggressively fund its 66.7% owned
subsidiary, Contango Offshore Exploration LLC ("COE"). REX and COE
each have approximately 2,000 blocks of 3-D seismic that is being
reprocessed by the Company's exploration partner. REX and COE are
focused on generating deep shelf and deep water exploration prospects
in the Gulf of Mexico."
    Mr. Peak further said, "Our deep shelf Vermilion 73 prospect is
drilling, and our Freeport, Texas LNG project continues to make
progress. Our current production is about 16,000 MMBtued with monthly
EBITDAX, based on current prices, of approximately $1.5 million
through March 31, 2004."
    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. The Company has reported EBITDAX because it
believes 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. The Company believes 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 the Company's 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
the Company's statements of cash flows. Investors should carefully
consider the specific items included in the Company's computation of
EBITDAX. While the Company has disclosed its EBITDAX to permit a more
complete comparative analysis of its operating performance and debt
servicing ability relative to other companies, investors should be
cautioned that EBITDAX as reported by the Company 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.
    The securities sold in this private placement have not been
registered under the Securities Act of 1933 or any state securities
laws and unless so registered may not be offered or sold in the United
States (or to a U.S. person) except pursuant to an exemption from, or
in a transaction not subject to, the registration requirements of the
Securities Act of 1933 and applicable state securities laws. However,
Contango has agreed to file a registration statement for all shares of
common stock underlying the Series C Preferred Stock. This news
release is neither an offer to sell nor a solicitation of an offer to
buy any of these securities.
    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