Exhibit 99.1
Contango Reports First Quarter Earnings and Updates Operations
HOUSTON--(BUSINESS WIRE)--Nov. 14, 2005--Contango Oil & Gas
Company (AMEX:MCF) reported net income attributable to common stock
for the three months ended September 30, 2005 of $0.1 million, or
$0.01 per basic and diluted share, compared to net income attributable
to common stock for the three months ended September 30, 2004 of $1.4
million, or $0.11 per basic and diluted share. Natural gas and oil
sales from continuing and discontinued operations for the three months
ended September 30, 2005 were $1.2 million, down from $6.7 million for
the three months ended September 30, 2004. The decrease in revenue was
primarily the result of the sale of our south Texas natural gas and
oil interests completed in December 2004. The $1.2 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 $0.7 million for the three months ended
September 30, 2005, down from EBITDAX for the three months ended
September 30, 2004 of $5.0 million.
Kenneth R. Peak, Contango's Chairman and Chief Executive Officer,
said, "We are continuing to focus on developing our Fayetteville Shale
play in Arkansas, as well as our two offshore prospects, Eugene Island
10 ("Dutch") and Grand Isle 72 ("Liberty") where we will operate
through our wholly-owned subsidiary, Contango Operators, Inc. ("COI").
We plan to begin drilling both of our offshore prospects before
calendar year-end. Both prospects will be drilled under turn-key
drilling contracts."
Mr. Peak continued, "In the Fayetteville Shale, we and our
partners have now acquired or received commitments on approximately
37,000 acres and will eventually acquire at least 40,000 acres. We
have now identified a number of drillable prospects and plan to begin
a program of drilling six horizontal wells by mid-year 2006."
"We recently drilled our first Smackover exploratory well in
Alabama, the Alta Blackstone 10-4. The well is in the process of being
completed and we expect the well to begin production by late November
at a rate of 500 barrels of oil per day. We have identified and plan
to drill two additional exploratory Smackover wells by the end of the
first calendar quarter of 2006."
"Our production platform at Ship Shoal 358 and the pipeline to
shore at Eugene Island-113B sustained damage during Hurricane Rita and
are in the process of being repaired. We are not responsible for the
capital costs required to repair the platforms, pipelines, or other
facilities related to these wells and are not materially impacted by
the temporary loss of production from these two wells. Both of these
wells, together with an earlier discovery at Eugene Island 76, are
expected to begin production in the first calendar quarter of 2006."
As of November 11, 2005 we have approximately $25 million in cash,
cash equivalents, and short term investments and no debt. The Company
currently has production of approximately 1.8 million cubic feet
equivalent per day ("MMcfe/d") of natural gas. Once the repairs to our
non-operated offshore facilities are completed and our Eugene Island
76 and Alta Blackstone 10-4 wells begin producing, we anticipate that
our first calendar quarter production will increase to approximately
3.5 to 4.0 MMcfe/d."
CONTANGO OIL & GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
September 30,
-----------------------
2005 2004
----------- -----------
REVENUES:
Natural gas and oil sales $1,186,865 $579,613
----------- -----------
Total revenues 1,186,865 579,613
----------- -----------
EXPENSES:
Operating expenses 164,380 43,849
Exploration expenses 339,438 788,067
Depreciation, depletion and amortization 277,084 160,284
Impairment of natural gas and oil
properties - 112,000
General and administrative expense 922,263 812,473
----------- -----------
Total expenses 1,703,165 1,916,673
----------- -----------
LOSS FROM CONTINUING OPERATIONS BEFORE
OTHER INCOME AND INCOME TAXES (516,300) (1,337,060)
OTHER INCOME (EXPENSE):
Interest expense (96) (48,976)
Interest income 209,053 17,853
Gain (loss) on sale of assets and other 209,522 (40,506)
----------- -----------
LOSS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES (97,821) (1,408,689)
Benefit for income taxes 48,854 491,686
----------- -----------
LOSS FROM CONTINUING OPERATIONS (48,967) (917,003)
----------- -----------
DISCONTINUED OPERATIONS
Discontinued operations, net of income
taxes 260,268 2,399,903
----------- -----------
NET INCOME 211,301 1,482,900
Preferred stock dividends 151,000 105,000
----------- -----------
NET INCOME ATTRIBUTABLE TO COMMON STOCK $60,301 $1,377,900
=========== ===========
NET INCOME (LOSS) PER SHARE:
Basic
Continuing operations $(0.01) $(0.08)
Discontinued operations 0.02 0.19
----------- -----------
Total $0.01 $0.11
=========== ===========
Diluted
Continuing operations $(0.01) $(0.08)
Discontinued operations 0.02 0.19
----------- -----------
Total $0.01 $0.11
=========== ===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 14,444,504 12,867,906
=========== ===========
Diluted 14,444,504 12,867,906
=========== ===========
The summarized financial results for discontinued operations for
each of the periods ended September 30, are as follows:
Operating Results: Three Months Ended
September 30,
----------------------------
2005 2004
----------- -----------
Revenues $3,685 $6,092,629
Operating (expenses) credits 373,130 (a) (808,013)
Depreciation expenses - (1,569,619)
Exploration expenses - (22,838)
Gain on sale of discontinued operations 23,598 -
----------- -----------
Gain before income taxes $400,413 $3,692,159
Provision for income taxes (140,145) (1,292,256)
----------- -----------
Gain from discontinued operations, net of
income taxes $260,268 $2,399,903
=========== ===========
(a) credit due to severance tax refunds
Production, Prices, Operating Expenses, and Other
Three Months Ended
September 30,
-------------------------
2005 2004
------------ ------------
(Dollar amounts in 000s,
Production Data: except per Mcfe amounts)
Natural gas (million cubic feet) 91 979
Oil and condensate (thousand barrels) 6 19
Total (million cubic feet equivalent) 127 1,093
Natural gas (thousand cubic feet per day) 984 10,641
Oil and condensate (barrels per day) 66 207
Total (thousand cubic feet equivalent per
day) 1,380 11,883
Average sales price:
Natural gas (per thousand cubic feet) $8.86 $5.98
Oil and condensate (per barrel) $63.61 $42.27
Selected data per Mcfe:
Production and severance taxes $(2.42) $(0.02)
Lease operating expenses $0.78 $0.80
General and administrative expenses $7.25 $0.74
Depreciation, depletion and amortization
of natural gas and oil properties $2.07 $1.55
EBITDAX (1) $734 $4,967
(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
September 30,
-------------------------
Reconciliation of EBITDAX: 2005 2004
------------ ------------
(Dollar amounts in 000s)
(Loss) from continuing operations $(516) $(1,337)
Exploration expenses 339 788
Depreciation, depletion and amortization 277 160
Impairment of natural gas and oil
properties - 112
Gain (loss) on sale of assets and other 210 (41)
------------ ------------
EBITDAX from continuing operations 310 (318)
Income from discontinued operations before
taxes 400 3,692
Exploration expenses - 23
Depreciation, depletion and amortization - 1,570
Gain on sale of assets and other 24 -
------------ ------------
EBITDAX $734 $4,967
============ ============
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 now operate 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
companies involved 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