EXHIBIT 99.1
Contango Reports Third Quarter Earnings
HOUSTON--(BUSINESS WIRE)--May 12, 2004--Contango Oil & Gas Company
(AMEX:MCF) reported net income attributable to common stock for the
three months ended March 31, 2004 of $1.2 million, or $0.11 per basic
share and $0.09 per diluted share, compared to a net loss attributable
to common stock for the three months ended March 31, 2003 of $1.9
million, or $0.21 per basic and diluted share. Natural gas and oil
sales for the three months ended March 31, 2004 were $6.6 million.
Natural gas and oil sales for the three months ended March 31, 2003
were $10.0 million. EBITDAX was $5.6 million for the three months
ended March 31, 2004, up from EBITDAX for the three months ended March
31, 2003 of $3.0 million.
Net income attributable to common stock for the nine months ended
March 31, 2004 was $8.2 million, or $0.83 per basic share and $0.67
per diluted share, compared to a net loss attributable to common stock
for the nine months ended March 31, 2003 of $6.1 million, or $0.68 per
basic and diluted share. Natural gas and oil sales for the nine months
ended March 31, 2004 were $20.8 million. Natural gas and oil sales for
the nine months ended March 31, 2003 were $24.8 million. EBITDAX was
$24.0 million for the nine months ended March 31, 2004, up from
EBITDAX for the nine months ended March 31, 2003 of $13.8 million.
Kenneth R. Peak, Contango's chairman and chief executive officer,
said, "This quarter continues Contango's impressive financial
performance. For the nine months, we earned $8.2 million in net after
tax income available to our common stockholders and generated $24.0
million in EBITDAX on $21.0 million of revenues. We have a strong
balance sheet with $2.5 million of debt currently outstanding and
$21.0 million of unused bank loan capacity. Near record commodity
prices, together with our low cost structure, are enabling us to
continue to generate $1.5 to $2.0 million of monthly EBITDAX despite
recent property sales and normal production declines in existing
fields."
Mr. Peak continued, "Our capex budget for exploration drilling to
replace and grow our reserves is ramping up with two wells currently
drilling and another two wells expected to spud within the next month.
In the central Gulf of Mexico lease sale held in March 2004, we were
the apparent high bidder on 24 blocks, 18 of which have been awarded.
For the remainder of calendar year 2004, we expect to drill about 15
to 20 exploration wells, three to five of which we expect will be deep
shelf offshore Gulf of Mexico wells in which our partially owned
subsidiaries Republic Exploration and Contango Offshore Exploration
will be fully carried."
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.
CONTANGO OIL & GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
------------------------ -------------------------
2004 2003 2004 2003
----------- ------------ ------------ ------------
REVENUES:
Natural gas and
oil sales $6,611,139 $10,061,351 $20,843,951 $24,793,109
Gain (loss) from
hedging
activities - (5,230,672) 58,171 (5,416,998)
----------- ------------ ------------ ------------
Total revenues 6,611,139 4,830,679 20,902,122 19,376,111
----------- ------------ ------------ ------------
EXPENSES:
Operating expenses 493,008 1,448,367 3,061,922 4,179,166
Exploration
expenses 1,737,499 3,588,654 5,225,497 15,496,798
Depreciation,
depletion and
amortization 1,747,527 1,942,144 5,160,262 6,518,654
Impairment of
natural gas and
oil properties - - 42,995 -
General and
administrative
expenses 662,898 391,483 1,808,478 1,464,576
----------- ------------ ------------ ------------
Total expenses 4,640,932 7,370,648 15,299,154 27,659,194
----------- ------------ ------------ ------------
INCOME (LOSS) FROM
OPERATIONS 1,970,207 (2,539,969) 5,602,968 (8,283,083)
Interest expense (28,804) (177,860) (308,449) (531,763)
Interest income 12,263 6,498 31,929 27,663
Gain on sale of
marketable
securities - - 710,322 -
Gain on sale of
assets and other 128,904 - 7,245,314 36,150
----------- ------------ ------------ ------------
INCOME (LOSS)
BEFORE INCOME
TAXES 2,082,570 (2,711,331) 13,282,084 (8,751,033)
(Provision)
benefit for
income taxes (728,900) 948,966 (4,581,514) 3,061,216
----------- ------------ ------------ ------------
NET INCOME (LOSS) 1,353,670 (1,762,365) 8,700,570 (5,689,817)
Preferred stock
dividends 173,333 150,000 500,000 450,000
----------- ------------ ------------ ------------
NET INCOME (LOSS)
ATTRIBUTABLE
TO COMMON STOCK $1,180,337 $(1,912,365) $8,200,570 $(6,139,817)
=========== ============ ============ ============
NET INCOME (LOSS)
PER SHARE:
Basic $0.11 $(0.21) $0.83 $(0.68)
=========== ============ ============ ============
Diluted $0.09 $(0.21) $0.67 $(0.68)
=========== ============ ============ ============
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING:
Basic 11,145,896 9,158,755 9,927,796 9,080,392
=========== ============ ============ ============
Diluted 14,392,811 9,158,755 13,029,200 9,080,392
=========== ============ ============ ============
CONTANGO OIL & GAS COMPANY AND SUBSIDIARIES
PRODUCTION, PRICES, OPERATING EXPENSES, EBITDAX AND OTHER
Three Months Ended Nine Months Ended
March 31, March 31,
------------------------ -------------------------
2004 2003 2004 2003
----------- ------------ ------------ ------------
Natural gas and
oil sales $6,611,139 $10,061,351 $20,843,951 $24,793,109
Production:
Natural gas
(thousand cubic
feet) 1,006,576 1,322,400 3,414,932 4,642,314
Oil and condensate
(barrels) 20,108 30,744 77,873 107,389
Total (thousand
cubic feet
equivalent) 1,127,224 1,506,864 3,882,170 5,286,648
Natural gas
(thousand cubic
feet per day) 11,061 14,693 12,418 16,943
Oil and condensate
(barrels per day) 221 342 283 392
Total (thousand
cubic feet
equivalent per
day) 12,387 16,745 14,116 19,295
Average sales
price:
Natural gas (per
thousand cubic
feet) $5.90 $6.84 $5.41 $4.69
Oil and condensate
(per barrel) $33.44 $33.22 $30.57 $27.96
Total (per
thousand cubic
feet equivalent) $5.86 $6.67 $5.37 $4.69
Selected data per Mcfe:
Production and
severance taxes $0.02 $0.48 $0.22 $0.33
Lease operating
expenses $0.42 $0.48 $0.57 $0.46
General and
administrative
expenses $0.59 $0.26 $0.47 $0.28
Depreciation,
depletion and
amortization of
natural gas and
oil properties $1.52 $1.25 $1.30 $1.21
EBITDAX (1) $5,584,137 $2,990,829 $23,987,358 $13,768,519
(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. 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.
A reconciliation of EBITDAX to income (loss) from operations for
the periods indicated is presented below.
Three Months Ended Nine Months Ended
March 31, March 31,
------------------------ -------------------------
2004 2003 2004 2003
----------- ------------ ------------ ------------
Income (loss) from
operations $1,970,207 $(2,539,969) $5,602,968 $(8,283,083)
Exploration
expenses 1,737,499 3,588,654 5,225,497 15,496,798
Depreciation,
depletion and
amortization 1,747,527 1,942,144 5,160,262 6,518,654
Impairment of
natural gas and
oil properties - - 42,995 -
Gain on sale of
marketable
securities - - 710,322 -
Gain on sale of
assets and other 128,904 - 7,245,314 36,150
----------- ------------ ------------ ------------
EBITDAX $5,584,137 $2,990,829 $23,987,358 $13,768,519
=========== ============ ============ ============
CONTACT: Contango Oil & Gas Company, Houston
Kenneth R. Peak, 713-960-1901
www.contango.com