Exhibit 99.1


         Contango Announces Exploration Discovery and Updates Operations

    HOUSTON--(BUSINESS WIRE)--March 2, 2006--Contango Oil & Gas
Company (AMEX:MCF) today announced an exploration discovery at Grand
Isle 72 ("Liberty"), located approximately 25 miles offshore Louisiana
in 128 feet of water, and operated by Contango Operators, Inc.
("COI"), a wholly-owned subsidiary of the Company.
    The Grand Isle 72 #1 well was drilled to a total measured depth of
14,256 feet and the wireline logs of the well indicated the presence
of hydrocarbons within four zones with approximately 140 feet of
potential net pay. The lower most pay sand tested natural gas at a
rate of 5 million cubic feet per day ("MMcf/d") and 14 barrels of
condensate per day, based on a four hour test and 3,400 pounds per
square inch (psi) of flowing tubing pressure. Production casing has
been set, completion operations are underway, and the well is
scheduled to commence first production prior to calendar year-end
2006. The remaining pay sands will be completed as the lower sands are
depleted.
    COI paid a 50% working interest through the completion and testing
of the well, and has a 25% working interest thereafter. Contango
Offshore Exploration LLC ("COE"), a subsidiary in which the Company
owns a 76% interest, generated the prospect and was fully carried in
the drilling costs through the completion and testing of the well and
will have a 50% working interest thereafter. The net revenue interests
to COI and COE following well completion and testing are estimated to
be 20% and 40%, respectively. The net revenue interest to Contango, as
a whole, will be approximately 50%. Our two third party partners each
paid a 25% working interest through the completion and testing of the
well, and each have a 12.5% working interest thereafter.
    Kenneth R. Peak, Contango's Chairman and Chief Executive Officer,
said, "We are pleased to have successfully logged an offshore
discovery on our Grand Isle 72 block. The discovery is the first for
our new operating subsidiary, COI. In other offshore activities, our
farm-out prospect, Main Pass 221, is currently being drilled, and we
expect to begin drilling our Eugene Island 10 prospect in late March
2006. We expect to begin drilling our High Island A-279 and West Delta
43 prospects before calendar year-end.
    "In our Arkansas Fayetteville Shale Play, we have secured a
drilling rig, prepared three drill sites, and expect to drill our
first well, the Alta-Beck #1-32H, in April 2006. The Arkansas Oil &
Gas Commission has now approved seven 640-acre drilling units, which
we estimate will allow our partnership to drill and operate up to 63
horizontal wells. After we drill our first well, we expect to drill
one additional well per month through the remaining calendar year
2006. In addition, we have been integrated into 15 wells that are
being operated by a third party oil and gas exploration company, four
of which are producing. The remaining 11 horizontal wells are either
being drilled or are expected to be drilled over the next three
months."
    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, and in the Arkansas
Fayetteville Shale. 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 focused on commercializing 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