Exhibit 99.1
Contango Reports Second Quarter Earnings
HOUSTON--(BUSINESS WIRE)--Feb. 13, 2004--Contango Oil & Gas
Company (AMEX:MCF) reported net income attributable to common stock
for the three months ended December 31, 2003 of $4.1 million, or $0.44
per basic share and $0.33 per diluted share, compared to a net loss
attributable to common stock for the three months ended December 31,
2002 of $4.4 million, or $0.49 per basic and diluted share. Natural
gas and oil sales for the three months ended December 31, 2003 were
$6.0 million. Natural gas and oil sales for the three months ended
December 31, 2002 were $7.7 million. EBITDAX was $10.4 million for the
three months ended December 31, 2003, up from EBITDAX for the three
months ended December 31, 2002 of $5.2 million.
Net income attributable to common stock for the six months ended
December 31, 2003 was $7.0 million, or $0.75 per basic share and $0.58
per diluted share, compared to a net loss attributable to common stock
for the six months ended December 31, 2002 of $4.2 million, or $0.47
per basic and diluted share. Natural gas and oil sales for the six
months ended December 31, 2003 were $14.2 million. Natural gas and oil
sales for the six months ended December 31, 2002 were $14.7 million.
EBITDAX was $18.4 million for the six months ended December 31, 2003,
up from EBITDAX for the six months ended December 31, 2002 of $10.8
million.
Contango also announced that the borrowing base on its existing
secured revolving line of credit with Guaranty Bank, FSB has been
increased from $19.0 million to $25.0 million effective February 1,
2004. The Company currently has no borrowings under its bank line of
credit.
Kenneth R. Peak, Contango's chairman and chief executive officer,
said, "We had a strong six months, with $7.0 million of net income and
$18.4 million in EBITDAX. Since June 30, 2003, we have reduced our
debt from $22.35 million to no debt outstanding today and currently
have $25.0 million of available bank loan capacity. Our current
production rate is approximately 15,000 MMBtue per day, and at
anticipated production levels and current commodity prices, we expect
to have EBITDAX of approximately $1.5 to $2.0 million per month
through June 2004. We have five separate onshore exploration prospects
in various stages, expect to be carried in three to six offshore
exploration projects in calendar year 2004 and our Freeport LNG
project continues to move forward. We also are pursuing our first
international exploration prospect venture in the Aquitaine Basin in
France. We would expect this well to spud sometime this summer."
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
(Unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
------------------------ -------------------------
2003 2002 2003 2002
----------- ------------ ------------ ------------
REVENUES:
Natural gas and
oil sales $5,980,308 $7,714,265 $14,232,812 $14,731,758
Gain (loss) from
hedging activities (24,071) (192,970) 58,171 (186,326)
----------- ------------ ------------ ------------
Total revenues 5,956,237 7,521,295 14,290,983 14,545,432
----------- ------------ ------------ ------------
EXPENSES:
Operating expenses 916,685 1,671,028 2,568,914 2,730,799
Exploration
expenses 2,131,885 9,368,212 3,487,998 11,908,144
Depreciation,
depletion and
amortization 1,618,899 2,187,751 3,412,735 4,576,510
Impairment of
natural gas and
oil properties 42,995 - 42,995 -
General and
administrative
expenses 768,473 659,751 1,145,580 1,073,093
----------- ------------ ------------ ------------
Total expenses 5,478,937 13,886,742 10,658,222 20,288,546
----------- ------------ ------------ ------------
INCOME (LOSS) FROM
OPERATIONS 477,300 (6,365,447) 3,632,761 (5,743,114)
Interest expense (115,235) (169,583) (279,645) (353,903)
Interest income 5,250 9,903 19,666 21,165
Gain on sale of
marketable
securities 65,023 - 710,322 -
Gain on sale of
assets and other 6,061,805 - 7,116,410 36,150
----------- ------------ ------------ ------------
INCOME (LOSS)
BEFORE INCOME
TAXES 6,494,143 (6,525,127) 11,199,514 (6,039,702)
(Provision) benefit
for income taxes (2,205,734) 2,230,807 (3,852,614) 2,112,250
----------- ------------ ------------ ------------
NET INCOME (LOSS) 4,288,409 (4,294,320) 7,346,900 (3,927,452)
Preferred stock
dividends 176,667 150,000 326,667 300,000
----------- ------------ ------------ ------------
NET INCOME (LOSS)
ATTRIBUTABLE
TO COMMON STOCK $4,111,742 $(4,444,320) $7,020,233 $(4,227,452)
=========== ============ ============ ============
NET INCOME (LOSS)
PER SHARE:
Basic $0.44 $(0.49) $0.75 $(0.47)
=========== ============ ============ ============
Diluted $0.33 $(0.49) $0.58 $(0.47)
=========== ============ ============ ============
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING:
Basic 9,366,423 9,043,282 9,332,547 9,043,282
=========== ============ ============ ============
Diluted 12,936,563 9,043,282 12,641,092 9,043,282
=========== ============ ============ ============
CONTANGO OIL & GAS COMPANY AND SUBSIDIARIES
PRODUCTION, PRICES, OPERATING EXPENSES, EBITDAX AND OTHER
Three Months Ended Six Months Ended
December 31, December 31,
------------------------ -------------------------
2003 2002 2003 2002
------------ ----------- ------------ ------------
Production:
Natural gas
(thousand cubic
feet) 1,045,505 1,606,846 2,408,357 3,319,914
Oil and condensate
(barrel) 22,160 38,398 57,766 76,645
Total (thousand
cubic feet
equivalent) 1,178,465 1,837,234 2,754,953 3,779,784
Natural gas
(thousand cubic
feet per day) 11,364 17,466 13,089 18,043
Oil and condensate
(barrels per day) 241 417 314 417
Total (thousand
cubic feet
equivalent per
day) 12,810 19,968 14,973 20,545
Average sales
price:
Natural gas (per
thousand cubic
feet) $5.08 $4.21 $5.20 $3.84
Oil and condensate
(per barrel) $30.10 $24.63 $29.57 $25.85
Total (per thousand
cubic feet
equivalent) $5.07 $4.20 $5.17 $3.90
Selected data per Mcfe:
Production and
severance taxes $0.22 $0.31 $0.31 $0.27
Lease operating
expenses $0.56 $0.60 $0.63 $0.45
General and
administrative
expenses $0.65 $0.36 $0.42 $0.28
Depreciation,
depletion and
amortization of
natural gas and oil
properties $1.35 $1.17 $1.22 $1.19
EBITDAX (1) $10,397,907 $5,190,516 $18,403,221 $10,777,690
(1) 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.
A reconciliation of EBITDAX to income (loss) from operations for
the periods indicated is presented below.
Three Months Ended Six Months Ended
December 31, December 31,
------------------------- -------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
Income (loss) from
operations $477,300 $(6,365,447) $3,632,761 $(5,743,114)
Exploration
expenses 2,131,885 9,368,212 3,487,998 11,908,144
Depreciation,
depletion and
amortization 1,618,899 2,187,751 3,412,735 4,576,510
Impairment of
natural gas and
oil properties 42,995 - 42,995 -
Gain on sale of
marketable
securities 65,023 - 710,322 -
Gain on sale of
assets and other 6,061,805 - 7,116,410 36,150
------------ ------------ ------------ ------------
EBITDAX $10,397,907 $5,190,516 $18,403,221 $10,777,690
============ ============ ============ ============
CONTACT: Contango Oil & Gas Company, Houston
Kenneth R. Peak, 713-960-1901
www.mcfx.biz