Exhibit 99.1
Contango Announces Results of Operations for the Fiscal Year
Ended June 30, 2004 and Updates Operations
HOUSTON--(BUSINESS WIRE)--Sept. 27, 2004--Contango Oil & Gas
Company (AMEX:MCF) reported net income attributable to common stock
for the year ended June 30, 2004 of $7.1 million, or $0.68 per basic
share and $0.58 per diluted share, compared to a net loss attributable
to common stock for the year ended June 30, 2003 of $4.9 million, or
$0.54 per basic and diluted share. Natural gas and oil sales for the
year ended June 30, 2004 were $27.6 million. Natural gas and oil sales
for the year ended June 30, 2003 were $33.9 million. After reflecting
gains and losses from hedging activities, total revenues for the year
ended June 30, 2004 were $27.7 million, compared to total revenues for
the year ended June 30, 2003 of $28.2 million. EBITDAX for the year
ended June 30, 2004 was $29.0 million, up from EBITDAX for the year
ended June 30, 2003 of $20.9 million.
For the three months ended June 30, 2004, Contango had a net loss
of $1.1 million, or $0.09 per basic and diluted share. Total revenues
for the three months ended June 30, 2004 were $6.8 million. EBITDAX
for the three months ended June 30, 2004 was $5.0 million.
Total proved reserves as of June 30, 2004 were 15.6 billion cubic
feet of natural gas and 297,000 barrels of oil. The present value of
estimated future cash flows before income taxes as of June 30, 2004,
based on a Houston Ship Channel price of $5.90 per MMbtu of natural
gas ($6.16 per MMbtu NYMEX) and $37.05 per barrel of oil (NYMEX) and
discounted at 10% per annum, was $59.8 million. Proved developed
reserves represented all of the Company's total proved reserves.
Kenneth R. Peak, Contango's chairman and chief executive officer,
said, "I am pleased with our financial results for fiscal year 2004,
especially our EBITDAX of $29.0 million on revenues of $27.6 million.
Our Freeport LNG project achieved several important milestones,
including FERC approval and our plant's 1.5 Bcf per day of send-out
capacity is now fully subscribed. Ground-breaking and construction are
expected to begin before year end. We also continue to make
significant progress in our offshore exploration program. Our
partially owned subsidiaries were the high bidders on 24 blocks in the
March 2004 Central Gulf of Mexico lease sale. We now have five
prospects farmed-out, and our EI113-B prospect is drilling.
"Our fiscal year 2004 onshore exploration program was a
disappointment. Although we participated in the drilling of 14
exploratory wells, eight of which were successful, we only found 1.7
Bcfe, far short of replacing our 5.0 Bcfe of fiscal year 2004
production. We expect to participate in 5 to 7 onshore exploration
wells over the next 6 to 9 months. Financially, our bank line has just
been renewed at $21 million, and we have $1.0 million of debt
currently outstanding. Production is running at 15 MMbtue per day,
with monthly EBITDAX of $1.5 to $2.0 million projected through
December 2004."
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 Freeport LNG Development L.P., which is developing a 1.5
billion cubic feet per day LNG terminal in Freeport, Texas, and a 32%
interest in Contango Capital Partnership Management, LLC, which was
formed to invest in the alternative energy venture capital market with
a focus on environmentally preferred energy technologies. 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
Year Ended June 30,
-------------------------------------
2004 2003 2002
------------ ------------ ------------
REVENUES:
Natural gas and oil sales $27,629,814 $33,919,126 $23,901,995
Gain (loss) from hedging
activities 58,171 (5,708,958) 5,016,173
------------ ------------ ------------
Total revenues 27,687,985 28,210,168 28,918,168
------------ ------------ ------------
EXPENSES:
Operating expenses 3,888,185 5,736,454 3,904,541
Exploration expenses 9,873,164 17,922,116 2,694,425
Depreciation, depletion and
amortization 6,989,428 8,787,794 8,593,635
Impairment of natural gas and
oil properties 42,995 181,610 527,150
General and administrative
expense 2,695,592 2,063,503 2,901,566
------------ ------------ ------------
Total expenses 23,489,364 34,691,477 18,621,317
------------ ------------ ------------
INCOME (LOSS) FROM OPERATIONS 4,198,621 (6,481,309) 10,296,851
Interest expense (362,127) (710,587) (285,159)
Interest income 38,182 30,359 194,905
Gain on sale of marketable
securities 710,322 451,500 -
Gain on sale of assets and other 7,171,704 39,230 373,539
------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME
TAXES 11,756,702 (6,670,807) 10,580,136
(Provision) benefit for income
taxes (4,056,353) 2,334,782 (4,003,154)
------------ ------------ ------------
NET INCOME (LOSS) 7,700,349 (4,336,025) 6,576,982
Preferred stock dividends 620,000 600,000 600,000
------------ ------------ ------------
NET INCOME (LOSS) ATTRIBUTABLE
TO COMMON STOCK $7,080,349 $(4,936,025) $5,976,982
============ ============ ============
NET INCOME (LOSS) PER SHARE:
Basic $0.68 $(0.54) $0.55
============ ============ ============
Diluted $0.58 $(0.54) $0.48
============ ============ ============
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
Basic 10,484,078 9,129,169 10,841,665
============ ============ ============
Diluted 13,279,862 9,129,169 13,711,597
============ ============ ============
CONTANGO OIL & GAS COMPANY AND SUBSIDIARIES
PRODUCTION, PRICES, OPERATING EXPENSES, EBITDAX AND OTHER
Year Ended June 30,
--------------------------------
2004 2003 2002
---------- ---------- ----------
Natural gas and oil sales ($000) $27,630 $33,919 $23,902
EBITDAX ($000)(1) $28,986 $20,901 $22,486
Production:
Natural gas (thousand cubic feet) 4,328,507 6,016,395 6,981,909
Oil and condensate (barrels) 99,492 138,569 186,274
Total (thousand cubic feet
equivalent) 4,925,459 6,847,809 8,099,553
Natural gas (thousand cubic feet
per day) 11,827 16,483 19,129
Oil and condensate (barrels per day) 272 380 510
Total (thousand cubic feet
equivalent per day) 13,459 18,763 22,189
Average sales price:
Natural gas (per thousand cubic
feet) $5.65 $5.00 $2.94
Oil and condensate (per barrel) $31.99 $27.90 $21.44
Total (per thousand cubic feet
equivalent) $5.61 $4.95 $3.03
Selected data per Mcfe:
Production and severance taxes $0.16 $0.35 $0.20
Lease operating expense $0.63 $0.48 $0.28
General and administrative expense $0.55 $0.30 $0.36
Depreciation, depletion and
amortization of natural gas and oil
properties $1.39 $1.24 $1.05
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 and other. 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.
Year ended June 30,
--------------------------
2004 2003 2002
-------- -------- --------
($000)
Income (loss) from operations $4,199 $(6,481) $10,297
Exploration expenses 9,873 17,922 2,694
Depreciation, depletion and amortization 6,989 8,788 8,594
Impairment of natural gas and oil properties 43 181 527
Gain on sale of marketable securities 710 452 -
Gain on sale of assets and other 7,172 39 374
-------- -------- --------
EBITDAX $28,986 $20,901 $22,486
======== ======== ========
CONTACT: Contango Oil & Gas Company, Houston
Kenneth R. Peak, 713-960-1901
www.contango.com