Exhibit 99.1
Contango Oil & Gas Affiliates Apparent High Bidders on 24 Gulf of Mexico Lease
Blocks
HOUSTON--(BUSINESS WIRE)--March 18, 2004--Contango Oil & Gas Company
(AMEX:MCF) announced today that two affiliated companies bid on 37 blocks and
were the apparent high bidders on 24 blocks offered at the Central Gulf of
Mexico Lease Sale #190 held March 17, 2004 in New Orleans. Each of these blocks
is located on the shelf of the Gulf of Mexico in water depths of less than 200
meters. An apparent high bid ("AHB") gives the bidding party propriety in award
of offered tracts, notwithstanding the fact that the Minerals Management Service
("MMS") may reject all bids for a given tract. The MMS review process can take
up to 90 days on some bids. Upon completion of that process, final results for
all AHBs will be known.
Contango's 33% owned affiliate, Republic Exploration LLC ("Republic"), had
the AHB on 16 lease blocks with bids totaling approximately $5.6 million as
follows:
Block Republic's WI Bid Amount
- ---------------------------- ----------------- -------------
Eugene Island 76 100% $1,777,027
South Marsh Island 247 100% 750,757
Vermilion 36 100% 202,206
Vermilion 109 100% 138,875
Vermilion 130 100% 400,407
Vermilion 134 100% 275,752
West Cameron 80 100% 138,875
West Cameron 133 100% 414,905
West Cameron 167 100% 204,777
West Cameron 179 100% 150,151
West Cameron 185 100% 150,151
West Cameron 200 100% 173,407
West Delta 18 100% 52,808
West Delta 33 100% 505,099
West Delta 34 100% 80,826
West Delta 43 100% 204,757
------------
$5,620,780
============
Contango's 67% owned affiliate, Contango Offshore Exploration LLC ("COE"),
had the AHB on five lease blocks with bids totaling approximately $3.5 million
as follows:
Block COE's WI Bid Amount
- -------------------------- ------------- -------------
Grand Isle 63 100% $1,202,717
Grand Isle 72 100% 255,515
Grand Isle 73 100% 228,808
Main Pass 221 100% 1,330,304
Viosca Knoll 118 100% 505,057
-------------
$3,522,401
=============
Republic and COE, bidding jointly, had the AHB on three lease blocks with
bids totaling approximately $452,000 as follows:
Republic's/
Block COE's WI Bid Amount
- ------------------------------ ------------------- --------------
Ship Shoal 220 50%/50% $138,875
South Timbalier 191 50%/50% 105,505
South Timbalier 240 50%/50% 207,777
--------------
$452,157
==============
In addition, Contango's affiliates, Republic and COE, will share a
reversionary carried working interest in Vermilion 154, which was an AHB at
Lease Sale #190. If these blocks are awarded, Contango will own interests, both
directly and indirectly vis-a-vis its affiliates, in 41 federal lease blocks in
the Gulf of Mexico, covering approximately 202,200 acres.
Kenneth R Peak, Contango's chairman and chief executive officer, said, "The
scarcest commodity in today's U.S. based natural gas and oil exploration
business is quality drill ready prospects. The lease sale today is an important
addition to our prospect inventory. We expect to drill approximately 20
exploration wells between now and year-end 2004. We expect approximately 4 to 6
of these wells will be offshore exploration wells in which we have a carried
interest. The drilling of the first two of these offshore wells is planned for
May and October 2004. Our current production rate is approximately 14,000 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 approximately $1.1 million of bank debt outstanding and
currently have $21.4 million of available bank loan capacity."
Mr. Peak continued, "Please note that our Web page address has recently
changed to www.contango.com."
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.
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.contango.com.
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.contango.com