Exhibit 99.1
Contango Announces Results of
Operations for the Fiscal Year Ended June 30, 2005
HOUSTON--(BUSINESS WIRE)--Sept. 13, 2005--Contango Oil & Gas
Company (AMEX:MCF) reported net income attributable to common stock
for the year ended June 30, 2005 of $12.0 million, or $0.92 per basic
and diluted share, compared to net income attributable to common stock
for the year ended June 30, 2004 of $7.1 million, or $0.68 per basic
and diluted share. Natural gas and oil sales from continuing and
discontinued operations for the year ended June 30, 2005 were $16.3
million, down from $27.6 million for the year ended June 30, 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. EBITDAX was $28.5 million for the year ended June 30,
2005, down from EBITDAX for the year ended June 30, 2004 of $29.0
million.
For the three months ended June 30, 2005 Contango had a net loss
attributable to common stock of $1.4 million, or $0.16 per basic and
diluted share, compared to a net loss attributable to common stock for
the three months ended June 30, 2004 of $1.1 million, or $0.09 per
basic and diluted share. Natural gas and oil sales from continuing and
discontinued operations for the three months ended June 30, 2005 were
$1.3 million, down from $6.8 million for the three months ended June
30, 2004.
Kenneth R. Peak, Contango's Chairman and Chief Executive Officer,
said, "Fiscal-year 2005 was a productive year for us. We sold the
majority of our south Texas natural gas and oil properties in
December, paid-off all of our bank debt, greatly increased our
liquidity, and positioned ourselves strategically by making
substantial capital commitments to our Fayetteville Shale prospect
area and our two offshore exploration prospects, Eugene Island 10
("Dutch") and Grand Isle 72 ("Liberty"). We currently have production
of approximately 1,860 Mcfe/d and approximately $29 million in cash,
cash equivalents, and short-term investments."
Mr. Peak continued, "Since its inception in 1999, Contango has
primarily been a company focused on south Texas exploration and the
generation of offshore prospects that were subsequently sold on a
promoted basis to the industry. In the future, we will be a company
focused on developing our Fayetteville Shale play in Arkansas,
operating certain of our offshore prospects, maintaining our 10%
limited partnership interest in our Freeport LNG project, and maturing
our investments in alternative energy."
CONTANGO OIL & GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended June 30,
--------------------------------------
2005 2004 2003
------------ ------------ ------------
REVENUES:
Natural gas and oil sales $4,330,440 $194,983 $228,062
Gain (loss) from hedging
activities - 58,171 (5,708,958)
------------ ------------ ------------
Total revenues 4,330,440 253,154 (5,480,896)
------------ ------------ ------------
EXPENSES:
Operating expenses 506,943 142,809 112,326
Exploration expenses 6,607,049 8,847,533 12,640,878
Depreciation, depletion and
amortization 1,232,624 40,817 26,773
Impairment of natural gas and
oil properties 236,537 42,995 181,610
General and administrative
expense 3,570,957 2,695,592 2,063,503
------------ ------------ ------------
Total expenses 12,154,110 11,769,746 15,025,090
------------ ------------ ------------
LOSS FROM CONTINUING OPERATIONS
BEFORE OTHER INCOME AND
INCOME TAXES (7,823,670) (11,516,592) (20,505,986)
OTHER INCOME:
Interest expense (71,506) (362,127) (710,587)
Interest income 431,803 38,182 30,359
Gain on sale of marketable
securities - 710,322 451,500
Gain on sale of assets and
other 705,147 6,187,740 39,230
------------ ------------ ------------
LOSS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES (6,758,226) (4,942,475) (20,695,484)
Benefit for income taxes 2,350,257 1,788,359 7,243,419
------------ ------------ ------------
LOSS FROM CONTINUING OPERATIONS (4,407,969) (3,154,116) (13,452,065)
DISCONTINUED OPERATIONS:
Discontinued operations,
net of income taxes 16,825,905 10,854,465 9,116,040
------------ ------------ ------------
NET INCOME (LOSS) 12,417,936 7,700,349 (4,336,025)
Preferred stock dividends 420,000 620,000 600,000
------------ ------------ ------------
NET INCOME (LOSS) ATTRIBUTABLE
TO COMMON STOCK $11,997,936 $7,080,349 $(4,936,025)
============ ============ ============
NET INCOME (LOSS) PER SHARE:
Basic
Continuing operations $(0.37) $(0.36) $(1.54)
Discontinued operations 1.29 1.04 1.00
------------ ------------ ------------
Total $0.92 $0.68 $(0.54)
============ ============ ============
Diluted
Continuing operations $(0.37) $(0.36) $(1.54)
Discontinued operations 1.29 1.04 1.00
------------ ------------ ------------
Total $0.92 $0.68 $(0.54)
============ ============ ============
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
Basic 13,089,332 10,484,078 9,129,169
============ ============ ============
Diluted 13,089,332 10,484,078 9,129,169
============ ============ ============
The summarized financial results for discontinued operations for
each of the periods ended June 30, are as follows:
Operating Results: Twelve Months Ended
June 30,
--------------------------------------
2005 2004 2003
------------ ------------ ------------
Revenues $11,936,266 $27,434,831 $33,691,064
Operating expenses (728,283) (3,745,376) (5,624,128)
Depreciation expenses (1,583,358) (6,948,611) (8,761,021)
Exploration expenses (26,911) (1,025,631) (5,281,238)
Gain on sale of discontinued
operations 16,288,294 983,964 -
------------ ------------ ------------
Gain before income taxes $25,886,008 $16,699,177 $14,024,677
Provision for income taxes (9,060,103) (5,844,712) (4,908,637)
------------ ------------ ------------
Gain from discontinued
operations, net of income
taxes $16,825,905 $10,854,465 $9,116,040
============ ============ ============
A reconciliation of EBITDAX to income (loss) from operations and
operating results for discontinued operations for the periods
indicated is presented below.
Year ended June 30,
----------------------------------------------
2005 2004 2003 2002 2001
-------- --------- --------- -------- --------
($000)
Income (loss) from
continuing operations $(7,824) $(11,517) $(20,506) $1,353 $(3,213)
Exploration expenses 6,607 8,847 12,641 477 389
Depreciation, depletion
and amortization 1,233 41 27 217 298
Impairment of natural
gas and oil properties 237 43 181 198 300
Gain on sale of
marketable securities - 710 452 - -
Gain on sale of assets
and other 705 6,188 39 374 -
-------- --------- --------- -------- --------
EBITDAX from
continuing
operations 958 4,312 (7,166) 2,619 (2,226)
Income from
discontinued
operations before
taxes 25,886 16,699 14,025 8,944 13,724
Exploration expenses 27 1,026 5,281 2,217 3,778
Depreciation, depletion
and amortization 1,583 6,949 8,761 8,377 3,726
Impairment of natural
gas and oil properties - - - 329 -
-------- --------- --------- -------- --------
EBITDAX (1) $28,454 $28,986 $20,901 $22,486 $19,002
======== ========= ========= ======== ========
(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.
Production, Prices, Operating Expenses, and Other
Year Ended June 30,
---------------------------------------------
2005 2004 2003 2002 2001
-------- -------- --------- -------- --------
Production Data:
Natural gas (million
cubic feet) 2,124 4,329 6,016 6,982 3,570
Oil and condensate
(thousand barrels) 51 99 139 186 122
Total (million cubic
feet equivalent) 2,430 4,923 6,850 8,098 4,302
Natural gas (thousand
cubic feet per day) 5,820 11,827 16,483 19,129 9,781
Oil and condensate
(barrels per day) 139 272 380 510 335
Total (thousand cubic
feet equivalent per
day) 6,654 13,459 18,763 22,189 11,791
Average sales price:
Natural gas (per
thousand cubic feet) $6.53 $5.65 $5.00 $2.94 $5.92
Oil and condensate
(per barrel) $48.13 $31.99 $27.90 $21.44 $27.95
Selected data per Mcfe:
Production and
severance taxes $(0.25) $0.16 $0.35 $0.20 $0.39
Lease operating
expenses $0.76 $0.63 $0.48 $0.28 $0.22
General and
administrative
expenses $1.47 $0.55 $0.30 $0.36 $0.55
Depreciation,
depletion and
amortization of
natural gas and oil
properties $1.13 $1.39 $1.24 $1.05 $0.92
Proved Reserve Data:
Total proved reserves
(Mmcfe) 1,373 17,422 23,592 27,939 18,144
Pre-tax net present
value (SEC at 10%) $7,081 $59,767 $69,627 $53,349 $42,626
Contango is a Houston-based, independent natural gas and oil
company. The Company's core business is to explore, develop, produce
and acquire natural gas and oil properties primarily offshore in the
Gulf of Mexico and onshore along the Gulf Coast. As a recent addition
to our business, we will begin acting as an operator on certain
offshore prospects through our wholly-owned subsidiary, Contango
Operators, Inc. ("COI"). The Company also owns a 10% interest in a
limited partnership formed to develop an LNG receiving terminal in
Freeport, Texas, and holds investments 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