Exhibit 99.1

Contango Issues Series D Preferred Stock and Updates Operations

    HOUSTON--(BUSINESS WIRE)--July 18, 2005--Contango Oil & Gas
Company (AMEX:MCF) announced today that it has sold in a private
transaction $10.0 million of its Series D Preferred Stock. The shares
were purchased by a group of private investors. The Series D Preferred
Stock is perpetual and is convertible at any time into shares of
Contango common stock at a price of $12.00 per share. The dividend on
the Series D Preferred Stock can be paid quarterly in cash at a rate
of 6.0% per annum or paid-in-kind at a rate of 7.5% per annum. The
Company has agreed to file a registration statement covering the
common shares issuable upon conversion of the Series D Preferred
Stock. Energy Capital Solutions, LP acted as the placement agent for
this offering. The Company's fully diluted shares after this offering,
assuming the preferred shares are converted into common, and upon the
exercise of all outstanding options, would be 16,723,804.
    Kenneth R. Peak, Contango's Chairman and Chief Executive Officer,
said, "The net proceeds of this offering will supplement the Company's
already strong cash position and will be used to fund the Company's
Fayetteville Shale play, as well as the Company's offshore Gulf of
Mexico deep shelf exploration program. Remaining proceeds will be used
to fund onshore exploration prospects and any needed commitments to
Freeport LNG Development and the Contango Capital Partners Fund, and
for working capital and general corporate purposes.
    Following this offering we now have $38 million in cash and
short-term investments. We are continuing to make progress on our
three major capital expenditure projects. With exploration success,
our currently anticipated $4-5 million of capital commitments on each
of these projects would increase substantially and we felt it both
timely and prudent to access the capital markets at a time when
commodity prices are at near all time highs and interest rates are at
40 year lows."
    Kenneth R. Peak continued, "In our Fayetteville Shale play, we and
our partners have acquired approximately 25,000 acres at a cost of
approximately $4.5 million and are on course to acquire at least an
additional 5,000 acres over the next several months. Contango recently
participated in its first exploratory well in this play, the Sneed
#1-31, a vertical well that tested at a rate of 932 Mcf per day. This
exploration play is still in its early stages but we are pleased with
our growing acreage position and may look to expand our capital
commitment.
    Contango Operators, Inc (COI), our wholly-owned subsidiary, will
operate our two deep shelf exploration wells in which our anticipated
dry hole working interest commitment will be $4-5 million per well.
Available offshore rigs are in tight supply, but our current best
estimate is that we will be able to spud at least one of these
prospects prior to calendar year-end 2005. We also anticipate that we
will be carried in another two deep shelf wells prior to year end.
    Since the last quarter ended March 31, 2005, the Company was
carried in an offshore exploratory well, Eugene Island 76 which was
successful, and the well is expected to begin production in another
few months. In addition, we had a direct 10% working interest in West
Cameron 174 that was a dry hole. Our estimated share of this dry hole
cost was approximately $0.8 million. In the onshore, the Company has
drilled five exploratory wells, two of which were successful and three
that were dry holes. Our capital commitment for the three dry holes
was $1.1 million. A sixth onshore well is currently being drilled. Our
current production rate is 1,761 Mcfe per day."
    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, and 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