Exhibit 99.1
Contango Reports Second Quarter Earnings
HOUSTON--(BUSINESS WIRE)--Feb. 14, 2005--Contango Oil & Gas
Company (AMEX:MCF) reported net income attributable to common stock
for the three months ended Dec. 31, 2004 of $13.1 million, or $1.01
per basic and diluted share, compared to a net income attributable to
common stock for the three months ended Dec. 31, 2003 of $4.1 million,
or $0.44 per basic and $0.33 per diluted share. Natural gas and oil
sales from continuing and discontinued operations for the three months
ended Dec. 31, 2004 were $7.3 million, up from $6.0 million for the
three months ended Dec. 31, 2003. EBITDAX was $21.8 million for the
three months ended Dec. 31, 2004, up from EBITDAX for the three months
ended Dec. 31, 2003 of $10.4 million.
Net income attributable to common stock for the six months ended
Dec. 31, 2004 was $14.6 million, or $1.12 per basic and diluted share,
compared to a net income attributable to common stock for the six
months ended Dec. 31, 2003 of $7.0 million, or $0.75 per basic and
$0.58 per diluted share. Natural gas and oil sales from continuing and
discontinued operations for the six months ended Dec. 31, 2004 were
$14.0 million, down from $14.2 million for the six months ended Dec.
31, 2003. EBITDAX was $26.8 million for the six months ended Dec. 31,
2004, up from EBITDAX for the six months ended Dec. 31, 2003 of $18.4
million.
Kenneth R Peak, Contango's chairman and chief executive officer,
said, "In late December, we completed the sale of 16 Bcfe or
substantially all of our south Texas natural gas and oil interests to
Edge Petroleum Corporation for $50 million. As of Feb. 11, 2005, we
have $43.7 million in cash and cash equivalents. Our cash equivalents
are invested in highly liquid AAA tax exempt securities with
maturities of 90 days or less. In mid March our cash position will be
reduced by approximately $9 million to pay federal income taxes.
"The recent sale of our south Texas properties, including the
$16.3 million gain, has been classified in our financial statements as
discontinued operations. Our strategy and focus, however, are
unchanged and we continue as an independent natural gas and oil
exploration and production company.
"Our current capital expenditure budget for calendar year 2005 is
projected to be approximately $20 million. Our budgeted capital
expenditures call for us to drill 20 onshore wells at a budgeted cost
of $10 million in drilling costs, and to expend $5 million for seismic
and lease acquisitions. We are also projecting that our two offshore
subsidiaries will be carried in four to six Gulf of Mexico exploration
wells in 2005. We expect to spend an additional $1.5 million at our
Freeport LNG project, and have committed to invest an additional $1.5
million in the Contango Capital Partners Fund."
CONTANGO OIL & GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Six Months Ended
December 31, December 31,
------------------------- -------------------------
2004 2003 2004 2003
------------- ----------- ------------- -----------
REVENUES:
Natural gas and
oil sales $1,425,983 $18,198 $2,005,596 $76,917
Gain (loss) from
hedging
activities - (24,071) - 58,171
------------- ----------- ------------- -----------
Total revenues 1,425,983 (5,873) 2,005,596 135,088
------------- ----------- ------------- -----------
EXPENSES:
Operating
expenses 209,123 14,106 252,973 51,029
Exploration
expenses 944,273 2,153,056 1,732,339 3,276,541
Depreciation,
depletion and
amortization 459,338 6,789 619,622 14,800
Impairment of
natural gas and
oil properties - 42,995 112,000 42,995
General and
administrative
expenses 1,087,051 768,473 1,899,524 1,145,580
------------- ----------- ------------- -----------
Total expenses 2,699,785 2,985,419 4,616,458 4,530,945
------------- ----------- ------------- -----------
(LOSS) FROM
CONTINUING
OPERATIONS (1,273,802) (2,991,292) (2,610,862) (4,395,857)
Interest expense (22,341) (115,235) (71,317) (279,645)
Interest income 15,503 5,250 33,356 19,666
Gain on sale of
marketable
securities - 65,023 - 710,322
Gain on sale of
assets and other (46,313) 6,243,989 (86,820) 6,243,989
------------- ----------- ------------- -----------
INCOME (LOSS)
FROM CONTINUING
OPERATIONS
BEFORE INCOME
TAXES (1,326,953) 3,207,735 (2,735,643) 2,298,475
(Provision)
benefit for
income taxes 465,790 (1,055,492) 957,476 (737,250)
------------- ----------- ------------- -----------
INCOME (LOSS)
FROM CONTINUING
OPERATIONS (861,163) 2,152,243 (1,778,167) 1,561,225
------------- ----------- ------------- -----------
DISCONTINUED
OPERATIONS
Discontinued
operations, net
of income taxes 14,116,542 2,136,166 16,516,445 5,785,675
------------- ----------- ------------- -----------
NET INCOME 13,255,379 4,288,409 14,738,278 7,346,900
Preferred stock
dividends 105,000 176,667 210,000 326,667
------------- ----------- ------------- -----------
NET INCOME
ATTRIBUTABLE TO
COMMON STOCK $13,150,379 $4,111,742 $14,528,278 $7,020,233
============= =========== ============= ===========
NET INCOME (LOSS)
PER SHARE:
Basic
Continuing
operations $(0.07) $0.21 $(0.15) $0.13
Discontinued
operations 1.08 0.23 1.27 0.62
------------- ----------- ------------- -----------
Total $1.01 $0.44 $1.12 $0.75
============= =========== ============= ===========
Diluted
Continuing
operations $(0.07) $0.17 $(0.15) $0.12
Discontinued
operations 1.08 0.16 1.27 0.46
------------- ----------- ------------- -----------
Total $1.01 $0.33 $1.12 $0.58
============= =========== ============= ===========
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING:
Basic 13,049,641 9,366,423 12,960,450 9,332,547
============= =========== ============= ===========
Diluted 13,049,641 12,936,563 12,960,450 12,641,092
============= =========== ============= ===========
The summarized financial results for discontinued operations for each
of the periods ended Dec. 31, are as follows:
Operating Results: Three Months Ended Six Months Ended
December 31, December 31,
------------------------ -------------------------
2004 2003 2004 2003
------------ ----------- ------------ ------------
Revenues $5,858,649 $5,962,110 $11,951,278 $14,155,895
Operating expenses (382,016) (902,579) (1,190,029) (2,517,885)
Depreciation
expenses (13,739) (1,612,110) (1,583,358) (3,397,935)
Exploration
expenses (4,073) 21,171 (26,911) (211,457)
Gain (loss) on sale
of discontinued
operations 16,258,936 (182,184) 16,258,936 872,421
------------ ----------- ------------ ------------
Gain before
income taxes $21,717,757 $3,286,408 $25,409,916 $8,901,039
Provision for
income taxes (7,601,215) (1,150,242) (8,893,471) (3,115,364)
------------ ----------- ------------ ------------
Gain from
discontinued
operations, net
of income taxes $14,116,542 $2,136,166 $16,516,445 $5,785,675
============ =========== ============ ============
Production, Prices, Operating Expenses, and Other
Three Months Ended Six Months Ended
December 31, December 31,
------------------- -------------------
2004 2003 2004 2003
--------- --------- --------- ---------
(Dollar amounts in (Dollar amounts in
000s, except per 000s, except per
Production Data: Mcfe amounts) Mcfe amounts)
Natural gas (million cubic
feet) 931 1,046 1,910 2,408
Oil and condensate (thousand
barrels) 19 22 39 58
Total (million cubic feet
equivalent) 1,045 1,178 2,144 2,756
Natural gas (thousand cubic
feet per day) 10,120 11,364 10,438 13,089
Oil and condensate (barrels
per day) 209 241 213 314
Total (thousand cubic feet
equivalent per day) 11,374 12,810 11,717 14,973
Average sales price:
Natural gas (per thousand
cubic feet) $6.85 $5.08 $6.40 $5.20
Oil and condensate (per
barrel) $46.95 $30.10 $44.61 $29.57
Selected data per Mcfe:
Production and severance
taxes $(0.19) $0.22 $(0.11) $0.31
Lease operating expenses $0.76 $0.56 $0.78 $0.63
General and administrative
expenses $1.04 $0.65 $0.89 $0.42
Depreciation, depletion and
amortization of natural gas
and oil properties $0.43 $1.35 $1.00 $1.22
EBITDAX (1) $21,819 $10,399 $26,786 $18,404
(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 and
operating results for discontinued operations for the periods
indicated is presented below.
Three Months Ended Six Months Ended
December 31, December 31,
------------------- -------------------
Reconciliation of EBITDAX: 2004 2003 2004 2003
--------- --------- --------- ---------
(Dollar amounts in (Dollar amounts in
000s) 000s)
(Loss) from continuing
operations $(1,274) $(2,991) $(2,611) $(4,396)
Exploration expenses 944 2,153 1,732 3,277
Depreciation, depletion and
amortization 459 7 620 15
Impairment of natural gas and
oil properties - 43 112 43
Gain on sale of marketable
securities - 65 - 710
Gain (loss) on sale of assets
and other (46) 6,244 (87) 6,244
--------- --------- --------- ---------
EBITDAX from continuing
operations 83 5,521 (234) 5,893
Income from discontinued
operations before taxes 21,718 3,287 25,410 8,901
Exploration expenses 4 (21) 27 212
Depreciation, depletion and
amortization 14 1,612 1,583 3,398
--------- --------- --------- ---------
EBITDAX $21,819 $10,399 $26,786 $18,404
========= ========= ========= =========
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., 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.
CONTACT: Contango Oil & Gas Company, Houston
Kenneth R. Peak, 713-960-1901
www.contango.com