OilVoice - Contango Provides Gulf of Mexico Update

Contango Provides Gulf of Mexico Update

Tuesday, April 14, 2009

Contango Oil & Gas Company announces that since the last update of their share repurchase program on March 3, 2009, the Company has purchased an additional 300,500 shares of common stock for approximately $10.6 million at an average cost of $35.24 per share. Contango have now purchased 1,224,354 shares at an average cost per share of $42.30, for a total expenditure of approximately $51.8 million. The company's outstanding shares now stand at approximately 15.8 million and their fully diluted share count has been reduced by nearly 7.0% from approximately 17.7 million shares in September 2008 to 16.5 million shares today.

Central Gulf of Mexico Lease Sale No. 208

Contango’s affiliated company, Republic Exploration LLC (“REX”), was the apparent high bidder on two lease blocks at the Central Gulf of Mexico Lease Sale No. 208 held on March 18, 2009. REX bid $257,777 on East Cameron 210 and $157,777 on South Timbalier 97.

An apparent high bid (“AHB”) gives the bidding party priority in award of offered tracts, notwithstanding the fact that the Minerals Management Service (“MMS”) may reject all bids for a given tract. The MMS review process can take up to 90 days on some bids. Upon completion of that process, final results for all AHB’s will be known.

Operations Update

Current net production is approximately 82 million cubic feet equivalent per day with our Mary Rose #2 well shut-in for a workover. Contango are currently drilling their Eugene Island 56 #1, High Country West, exploration prospect. A third party independent reserve report was recently updated as at March 31, 2009 and the Company has proved developed reserves of 356.3 Bcfe. Contango remain debt-free and have approximately $27.0 million of cash on hand, and $50.0 million of unused borrowing capacity.

Kenneth R. Peak, Contango’s Chairman and Chief Executive Officer, said, “Since the founding of Contango in September of 1999, we have raised a total of $60.5 million in various equity offerings. Over this same time, we have expended approximately $64.7 million to purchase our stock through private and market transactions. The 'net capital' thus invested in the Company is a negative $4.2 million. In the same time frame, our retained earnings have gone from a negative $2.0 million in September 1999 to $324.9 million at December 31, 2008.”

Mr. Peak continued, “The difference between the number of our shares outstanding of 15.8 million and our fully diluted shares of 16.5 million is comprised of 685,167 options that have an average exercise price of $16.49 per share. Assuming these options were to be exercised 'cashless' - the likely eventuality - our fully diluted share count would be further reduced to approximately 16.3 million shares. The number of Mcfe’s 'owned' per share as at March 31, 2009 now stand at 22 Mcfe per fully diluted share, compared to 21 Mcfe per fully diluted share as at June 30, 2008. Thus, even though we have not yet drilled any new discoveries during this fiscal year, if you were a shareholder on July 1, 2008, the beginning of our fiscal year, you now own 7% more of the Company, have more Mcfe’s per share, and no debt senior to your ownership. We’ll mark that as a 'W' for the first 9 months of this fiscal year.”

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