Exhibit 99.1
Contango Reports Third Quarter
Earnings and Updates Operations
HOUSTON--(BUSINESS WIRE)--May 9, 2005--Contango Oil & Gas Company
(AMEX:MCF) reported a net loss attributable to common stock for the
three months ended March 31, 2005 of $1.2 million, or $0.09 per basic
and diluted share, compared to net income attributable to common stock
for the three months ended March 31, 2004 of $1.2 million, or $0.11
per basic and diluted share. Natural gas and oil sales from continuing
and discontinued operations for the three months ended March 31, 2005
were $1 million, down from $6.6 million for the three months ended
March 31, 2004. The decrease in revenue was primarily the result of
the sale of our south Texas natural gas and oil interests for $50
million, completed in December 2004. The $1 million of revenue for the
current quarter reflects primarily production from new reserves and
production from south Texas properties not included in the sale.
EBITDAX was $0.6 million for the three months ended March 31, 2005,
down from EBITDAX for the three months ended March 31, 2004 of $5.6
million.
Net income attributable to common stock for the nine months ended
March 31, 2005 was $13.4 million, or $1.02 per basic and diluted
share, compared to net income attributable to common stock for the
nine months ended March 31, 2004 of $8.2 million, or $0.83 per basic
and diluted share. Natural gas and oil sales from continuing and
discontinued operations for the nine months ended March 31, 2005 were
$15.0 million, down from $20.8 million for the nine months ended March
31, 2004. EBITDAX was $27.4 million for the nine months ended March
31, 2005, up from EBITDAX for the nine months ended March 31, 2004 of
$24.0 million.
We currently have approximately $34.8 million in cash, cash
equivalents, and short term investments and have no debt. We currently
have production of approximately 2,100 Mcf/d. Based on current prices
and production rates, the Company anticipates EBITDAX of approximately
$200,000 per month, net of estimated on-going general and
administrative expenses of $200,000 per month.
Kenneth R. Peak, Contango's Chairman and Chief Executive Officer,
said, "As a result of the Company's increased liquidity stemming from
our recent south Texas property sale, the Company is selectively
increasing its risk exposure in certain onshore and offshore
prospects. The Company will also for the first time operate two
offshore prospects in the Gulf of Mexico through its wholly owned
subsidiary, Contango Operators, Inc. Our estimated capital budget for
exploration activities for the remainder of the calendar year 2005 is
$21 million of which $12 million will be invested in just three
prospects: our Fayetteville Shale acreage acquisition project in
Arkansas at $4 million, and two offshore exploration prospects at $4
million each. While this shift in strategy greatly increases the
potential loss to the Company from dry holes on these prospects, it
may also significantly increase our potential profit should the wells
be successful."
Mr. Peak continued, "In the future, Contango expects to take
working interests in additional prospects generated by its two
partially owned subsidiaries, Republic Exploration and Contango
Offshore Exploration. Contango will be offered these prospects under
the same arms-length terms offered to industry participants. Some of
these working interests may involve commitments by the Company of $5
million or more per prospect."
CONTANGO OIL & GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Nine Months Ended
March 31, March 31,
------------------------ ------------------------
2005 2004 2005 2004
------------ ----------- ------------ -----------
REVENUES:
Natural gas and
oil sales $1,031,081 $28,327 $3,036,677 $105,244
Gain from hedging
activities - - - 58,171
------------ ----------- ------------ -----------
Total revenues 1,031,081 28,327 3,036,677 163,415
------------ ----------- ------------ -----------
EXPENSES:
Operating expenses 82,106 51,547 335,079 102,576
Exploration
expenses 1,970,442 1,394,253 3,702,781 4,670,794
Depreciation,
depletion and
amortization 322,550 6,202 942,172 21,002
Impairment of
natural gas and
oil properties 124,537 - 236,537 42,995
General and
administrative
expenses 620,738 662,898 2,520,262 1,808,478
------------ ----------- ------------ -----------
Total expenses 3,120,373 2,114,900 7,736,831 6,645,845
------------ ----------- ------------ -----------
(LOSS) FROM
CONTINUING
OPERATIONS (2,089,292) (2,086,573) (4,700,154) (6,482,430)
Interest expense (93) (28,804) (71,410) (308,449)
Interest income 168,466 12,263 201,822 31,929
Gain on sale of
marketable
securities - - - 710,322
Gain (loss) on sale
of assets and other (12,346) 18,858 (99,166) 6,262,847
------------ ----------- ------------ -----------
INCOME (LOSS) FROM
CONTINUING
OPERATIONS BEFORE
INCOME TAXES (1,933,265) (2,084,256) (4,668,908) 214,219
(Provision) benefit
for income taxes 676,642 729,489 1,634,118 (7,761)
------------ ----------- ------------ -----------
INCOME (LOSS) FROM
CONTINUING
OPERATIONS (1,256,623) (1,354,767) (3,034,790) 206,458
------------ ----------- ------------ -----------
DISCONTINUED
OPERATIONS
Discontinued
operations, net
of income taxes 184,579 2,708,437 16,701,024 8,494,112
------------ ----------- ------------ -----------
NET INCOME (LOSS) (1,072,044) 1,353,670 13,666,234 8,700,570
Preferred stock
dividends 105,000 173,333 315,000 500,000
------------ ----------- ------------ -----------
NET INCOME (LOSS)
ATTRIBUTABLE TO
COMMON STOCK $(1,177,044) $1,180,337 $13,351,234 $8,200,570
============ =========== ============ ===========
NET INCOME (LOSS)
PER SHARE:
Basic
Continuing
operations $(0.10) $(0.13) $(0.26) $(0.03)
Discontinued
operations 0.01 0.24 1.28 0.86
------------ ----------- ------------ -----------
Total $(0.09) $0.11 $1.02 $0.83
============ =========== ============ ===========
Diluted
Continuing
operations $(0.10) $(0.13) $(0.26) $(0.03)
Discontinued
operations 0.01 0.24 1.28 0.86
------------ ----------- ------------ -----------
Total $(0.09) $0.11 $1.02 $0.83
============ =========== ============ ===========
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING:
Basic 13,108,196 11,145,896 13,030,251 9,927,796
============ =========== ============ ===========
Diluted 13,108,196 11,145,896 13,030,251 9,927,796
============ =========== ============ ===========
The summarized financial results for discontinued operations for each
of the periods ended March 31, are as follows:
Operating Results: Three Months Ended Nine Months Ended
March 31, March 31,
------------------------ -------------------------
2005 2004 2005 2004
----------- ------------ ------------ ------------
Revenues $- $6,582,812 $11,951,278 $20,738,707
Operating expenses 254,609 (441,461) (935,420) (2,959,346)
Depreciation
expenses - (1,741,325) (1,583,358) (5,139,260)
Exploration
expenses - (343,246) (26,911) (554,703)
Gain on sale of
discontinued
operations 29,358 110,046 16,288,294 982,467
----------- ------------ ------------ ------------
Gain before
income taxes $283,967 $4,166,826 $25,693,883 $13,067,865
Provision for
income taxes (99,388) (1,458,389) (8,992,859) (4,573,753)
----------- ------------ ------------ ------------
Gain from
discontinued
operations, net of
income taxes $184,579 $2,708,437 $16,701,024 $8,494,112
=========== ============ ============ ============
Production, Prices, Operating Expenses, and Other
Three Months Ended Nine Months Ended
March 31, March 31,
------------------- ------------------
2005 2004 2005 2004
--------- -------- -------- --------
(Dollar amounts in (Dollar amounts in
Production Data: 000s, except per 000s, except per
Mcfe amounts) Mcfe amounts)
Natural gas (million cubic
feet) 120 1,007 2,030 3,415
Oil and condensate (thousand
barrels) 5 20 44 78
Total (million cubic feet
equivalent) 150 1,127 2,294 3,883
Natural gas (thousand cubic
feet per day) 1,333 11,061 7,409 12,418
Oil and condensate (barrels
per day) 56 221 161 283
Total (thousand cubic feet
equivalent per day) 1,669 12,387 8,375 14,116
Average sales price:
Natural gas (per thousand
cubic feet) $6.32 $5.90 $6.40 $5.41
Oil and condensate (per
barrel) $50.68 $33.44 $45.35 $30.57
Selected data per Mcfe:
Production and severance
taxes $(1.28) $0.02 $(0.18) $0.22
Lease operating expenses $0.15 $0.42 $0.74 $0.57
General and administrative
expenses $4.14 $0.59 $1.10 $0.47
Depreciation, depletion and
amortization of natural gas
and oil properties $2.06 $1.52 $1.07 $1.30
EBITDAX (1) $600 $5,584 $27,386 $23,987
(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 loss from operations and operating
results for discontinued operations for the periods indicated is
presented below.
Three Months Ended Nine Months Ended
March 31, March 31,
------------------- ------------------
Reconciliation of EBITDAX: 2005 2004 2005 2004
--------- --------- --------- --------
(Dollar amounts in (Dollar amounts in
000s) 000s)
(Loss) from continuing
operations $(2,089) $(2,086) $(4,700) $(6,482)
Exploration expenses 1,970 1,394 3,703 4,671
Depreciation, depletion and
amortization 323 6 942 21
Impairment of natural gas and
oil properties 124 - 236 43
Gain on sale of marketable
securities - - - 710
Gain (loss) on sale of assets
and other (12) 19 (99) 6,263
--------- --------- --------- --------
EBITDAX from continuing
operations 316 (667) 82 5,226
Income from discontinued
operations before taxes 284 4,167 25,694 13,068
Exploration expenses - 343 27 554
Depreciation, depletion and
amortization - 1,741 1,583 5,139
--------- --------- --------- --------
EBITDAX $600 $5,584 $27,386 $23,987
========= ========= ========= ========
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.; a 32% interest in Contango
Capital Partnership Management, LLC, and a 25% interest in the
Contango Capital Partners Fund, L.P., which were 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