Contango Oil & Gas Company reported a net loss attributable to common stock for the three months ended March 31, 2005 of $1.2 million, or $0.09 per basic and diluted share, compared to net income attributable to common stock for the three months ended March 31, 2004 of $1.2 million, or $0.11 per basic and diluted share. Natural gas and oil sales from continuing and discontinued operations for the three months ended March 31, 2005 were $1
million, down from $6.6 million for the three months ended March 31, 2004. The decrease in revenue was primarily the result of the sale of our south Texas natural gas and oil interests for $50 million, completed in December 2004. The $1 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 $0.6 million for the three months ended March 31, 2005, down from EBITDAX for the three months ended March 31, 2004 of $5.6 million. Net income attributable to common stock for the nine months ended March 31, 2005 was $13.4 million, or $1.02 per basic and diluted share, compared to net income attributable to common stock for the nine months ended March 31, 2004 of $8.2 million, or $0.83 per basic and diluted share. Natural gas and oil sales from continuing and discontinued operations for the nine months ended March 31, 2005 were $15.0 million, down from $20.8 million for the nine months ended March 31, 2004. EBITDAX was
$27.4 million for the nine months ended March 31, 2005, up from EBITDAX for the nine months ended March 31, 2004 of $24.0 million.
Contango currently have approximately $34.8 million in cash, cash equivalents, and short term investments and have no debt. Production is currently around 2,100 Mcf/d. Based on current prices and production rates, the Company anticipates EBITDAX of approximately $200,000 per month, net of estimated on-going general and administrative expenses of $200,000 per month.
Kenneth R Peak, Contango’s Chairman and Chief Executive Officer, said, “As a result of the Company’s increased liquidity stemming from our recent south Texas property sale, the Company is selectively increasing its risk exposure in certain onshore and offshore prospects. The Company will also for the first time operate two offshore prospects in the Gulf of Mexico through its wholly owned subsidiary, Contango Operators, Inc. Our estimated capital budget for exploration activities for the remainder of the calendar year 2005 is $21 million of which $12 million will be invested in just three prospects: our Fayetteville Shale acreage acquisition project in Arkansas at $4 million, and two offshore exploration prospects at $4 million each. While this shift in strategy greatly increases the potential loss to the Company from dry holes on these prospects, it may also significantly increase our potential profit should the wells be successful.”
Mr. Peak continued, “In the future, Contango expects to take working interests in additional prospects generated by its two partially owned subsidiaries, Republic Exploration and Contango Offshore Exploration. Contango will be offered these prospects under the same arms-length terms offered to industry participants. Some of these working interests may involve commitments by the Company of $5 million or more per prospect.”
