Exhibit 99.1

         Contango Announces Exploration Discovery at Its Dutch Prospect

     HOUSTON--(BUSINESS WIRE)--Oct. 12, 2006--Contango Oil & Gas Company
(AMEX:MCF) today announced an exploration discovery at its Dutch prospect
("Eugene Island 10"), located offshore Louisiana and operated by Contango
Operators, Inc. ("COI"), a wholly-owned subsidiary of the Company.

     A production liner has been set, electric logs run, and the Company is
continuing to drill further. Contango's independent third party engineer
estimates this well to have proved reserves net to Contango of 25 billion cubic
feet equivalent ("Bcfe"). Completion and testing operations have not yet begun,
but first production is estimated to commence by the end of the year. Estimated
costs net to Contango to bring this well to full production status are $2.7
million.

     COI has an 18.3% working interest and Republic Exploration LLC ("REX"), a
subsidiary in which the Company owns a 43% interest, has a 65% working interest
in Dutch. The net revenue interests to COI and REX are estimated to be
approximately 13% and 47%, respectively. The net revenue interest before payout
to Contango, as a whole, is approximately 33%.

     Kenneth R. Peak, Contango's Chairman and Chief Executive Officer, said,
"This discovery is a superb complement to our LNG and Fayetteville Shale
business. We will need more capital but our bank borrowing base will be
significantly enhanced by this discovery. Since we started operating via COI in
June 2005, we are now three for five in our offshore exploration efforts".

     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 in the
Arkansas Fayetteville Shale. The Company operates 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