Exhibit 99.1

             Contango Elects to Convert Its Series D Preferred Stock


    HOUSTON--(BUSINESS WIRE)--Jan. 16, 2007--Contango Oil & Gas
Company (AMEX:MCF) announced today that it has given notice to the
holders of its Series D preferred stock that the Company has elected
to convert all of the outstanding shares of Series D preferred stock
to shares of common stock. Pursuant to the terms of the Series D
preferred stock, the Company set January 15, 2007 as the mandatory
conversion date. The outstanding shares of the Series D preferred
stock have a face value of $9.5 million, currently pay a 6.0% annual
dividend and are convertible into 791,664 shares of Contango common
stock. Additionally, 100 shares of Series D preferred stock were
converted earlier this fiscal year into 41,666 shares of Contango
common stock, at the election of the holder. The shares of common
stock issued upon conversion of the Series D preferred stock are
registered for resale with the Securities and Exchange Commission.

    Kenneth R. Peak, the Company's Chairman and Chief Executive
Officer, said, "We appreciate the confidence and support of our Series
D shareholders. Updating our offshore operations, we expect our Eugene
Island 10 ("Dutch") well to begin producing by the end of January
2007, and we expect our Grand Isle 72 ("Liberty") well to begin
producing, and to spud our Dutch #2 exploration well, by the end of
February 2007."

    The Company also announced today that Moblize, Inc. ("Moblize"),
an oil field services technology company in which the Company has a
33% ownership interest, has been selected by the Society of Petroleum
Engineers Gulf Coast Chapter as one of "Eight Providers of Smart
Device Technology" that can assist oil and gas producers improve
production operations and better manage reservoir performance. Moblize
has been invited to speak at the Smart Devices and Real Time Systems -
Value to the Oilfield conference sponsored by Digital Energy on
January 26, 2007. See http://www.spegcs.org/en/cev/?1099 for
additional information. Moblize develops real time diagnostics and
field optimization solutions for the oil and gas industry using
open-standards based technologies. Additional information on Moblize
can be found at www.moblize.com.

    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 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