Contango Announces Results for the Fiscal Year Ended June 30, 2003 and Updates Operations.Energy Editors/Business Editors HOUSTON--(BUSINESS WIRE)--Sept. 16, 2003 Contango Contango When the futures price is above the expected future spot price. Consequently, the price will decline to the spot price before the delivery date. Notes: This is the opposite of backwardation. Oil & Gas Company (AMEX AMEX See: American Stock Exchange :MCF MCF malignant catarrhal fever. ) reported a net loss for the year ended June June: see month. 30, 2003 of $4.9 million, or $0.54 per basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to net income for the year ended June 30, 2002 of $6.0 million, or $0.55 per basic share and $0.48 per diluted share. Total revenues for the year ended June 30, 2003, after reflecting a loss of $5.7 million from hedging activities, were $28.2 million. Total revenues for the year ended June 30, 2002, after reflecting a gain of $5.0 million from hedging activities, were $28.9 million. EBITDAX Earnings Before Interest, Taxes, Depreciation, Depletion, Amortization, and Exploration Expenses - EBITDAX An indicator of a company's financial performance calculated as: for the year ended June 30, 2003 was $20.9 million, compared with $22.5 million for the year ended June 30, 2002. For the three months ended June 30, 2003, Contango had net income of $1.2 million, or $0.13 per basic share and $0.11 per diluted share. Total revenues for the three months ended June 30, 2003, after reflecting a loss of $292,000 from hedging activities, were $8.8 million. EBITDAX for the three months ended June 30, 2003 was $7.1 million. Total proved reserves proved reserves The quantity of minerals expected to be recoverable under current economic and operating conditions. The amount of proved reserves is important in valuing the stock of a company with significant holdings in natural resources. as of June 30, 2003 were 21.2 billion cubic feet of natural gas and 395,000 barrels of oil. The present value of estimated future cash flows before income taxes as of June 30, 2003, using prices of $5.23 per MMbtu of natural gas and $30.19 per barrel of oil and discounted at 10% per annum Per annum Yearly. , was $69.6 million. Proved producing reserves represented 97% of total proved reserves. Operations Update Contango also announced that on September September: see month. 12, 2003 it completed the sale of some non-core reserves in Brooks County, Texas Brooks County is a county located in the U.S. state of Texas. As of 2000, the population is 7,976. Its county seat is Falfurrias6. Brooks is named for James Abijah Brooks, a Texas Ranger and legislator. Geography According to the U.S. for $5.0 million. Proved reserves were 1.5 Bcfe and accounted for $5.0 million of the Company's discounted present value at 10% per annum as of June 30, 2003. After the sale of these properties, the Company has $12.3 million of debt outstanding and $11.4 million of unused bank borrowing capacity. Our current production rate following the sale of these properties is 16,000 MMbtue per day. At today's commodity prices, the Company expects EBITDAX of $1.5 to $2.0 million per month through year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 2003. Kenneth R. Peak, Chairman and Chief Executive Officer, said, "The increase in liquidity from this reserve sale comes at an opportune op·por·tune adj. 1. Suited or right for a particular purpose: an opportune place to make camp. 2. Occurring at a fitting or advantageous time: an opportune arrival. time. We now have eight wells, five onshore on·shore adj. 1. Moving or directed toward the shore: an onshore wind. 2. Located on the shore: an onshore beacon; an onshore patrol. adv. and three offshore, scheduled to begin drilling between now and year-end 2003. This is, by far, the highest activity level in the Company's history." "On our STEP properties, we will spud a Queen City development well in September. We recently completed a 3-D seismic shoot in Jim Hogg James Stephen "Jim" Hogg (March 24, 1851 – March 3, 1906) Born near Rusk, Texas, Hogg was a Texas lawyer and statesman, and the Texas-born Governor of Texas. Hogg is often remembered for naming his daughter Ima Hogg, an odd name which derived from a poem written by James' and Starr Counties, Texas and will drill an exploratory Queen City well on this acreage in October October: see month. 2003. If this play develops, we would expect to drill another five to seven wells with drilling expenditures in the $3.0 to $4.0 million range. We also have a shallow oil exploratory prospect that we will drill in October. If this well is successful, it could lead to another three to five wells." "Our 3-D seismic shoot with Alta ALTA Alberta (Canada) ALTA AltaVista (stock symbol) ALTA American Land Title Association ALTA American Literary Translators Association ALTA Atlanta Lawn Tennis Association Resources in Duval County, Texas Duval County is a county located in the U.S. state of Texas. In 2000, its population was 13,120. It is named for Burr H. Duval, a soldier in the Texas Revolution who died in the Goliad Massacre. The seat of the county is San Diego6. is on schedule, and we expect to have our field work completed by November November: see month. 1, 2003. If the shoot is successful, we could be drilling prospects by year-end. We are also going to participate with Alta Resources in the drilling of a Queen City exploratory well in Jim Hogg County. Drilling is expected to start in October 2003. If this play develops, we would expect to drill another five to seven wells with drilling expenditures in the $3.0 to $4.0 million range. Separately, we currently are participating with a 7.1% working interest in a 15,500 foot Wilcox Wilcox may refer to: Place names in the United States
See Wilcox (surname) Other
Commenting on offshore activities, Mr. Peak said, "Contango, Republic Exploration and Magnolia Magnolia, city, United States Magnolia (măgnō`lyə), city (1990 pop. 11,151), seat of Columbia co., SW Ark.; inc. 1855. Its oil industry has been important since 1938. Offshore Exploration have farmed out three "deep shelf" lease blocks. Magnolia's lease block is currently drilling, and the other two farmout wells are expected to spud by year-end 2003. Contango and its partially owned subsidiaries are fully carried on all drilling and completion costs on these prospects." Contango is a Houston-based, independent natural gas and oil company. The Company explores, develops, produces and acquires natural gas and oil properties primarily onshore in the Gulf Coast and offshore in the Gulf of Mexico Noun 1. Gulf of Mexico - an arm of the Atlantic to the south of the United States and to the east of Mexico Golfo de Mexico Atlantic, Atlantic Ocean - the 2nd largest ocean; separates North and South America on the west from Europe and Africa on the east . Contango also owns a 10% partnership interest in a proposed LNG LNG (liquefied natural gas): see under natural gas. terminal in Freeport, Texas Freeport is a city in Brazoria County, Texas within the Houston–Sugar Land–Baytown Metropolitan Area and is situated in Southeast Texas. As of the 2000 U.S. Census, the city population was 12,708 and is about sixteen miles away from Angleton. . Additional information can be found on our web page at www.mcfx.biz biz n. Informal Business. biz Noun Informal business Noun 1. . This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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.
CONTANGO OIL & GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended June 30,
-------------------------
2003 2002
------------ ------------
REVENUES:
Natural gas and oil sales $33,919,126 $23,901,995
Gain (loss) from hedging activities (5,708,958) 5,016,173
------------ ------------
Total revenues 28,210,168 28,918,168
------------ ------------
EXPENSES:
Operating expenses 5,736,454 3,904,541
Exploration expenses 17,922,116 2,694,425
Depreciation, depletion and amortization 8,787,794 8,593,635
Impairment of natural gas and oil
properties 181,610 527,150
General and administrative expense 2,063,503 2,901,566
------------ ------------
Total expenses 34,691,477 18,621,317
------------ ------------
INCOME (LOSS) FROM OPERATIONS (6,481,309) 10,296,851
Interest expense (710,587) (285,159)
Interest income 30,359 194,905
Gain on sale of assets and other 490,730 373,539
------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES (6,670,807) 10,580,136
(Provision) benefit for income taxes 2,334,782 (4,003,154)
------------ ------------
NET INCOME (LOSS) (4,336,025) 6,576,982
Preferred stock dividends 600,000 600,000
------------ ------------
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON
STOCK $(4,936,025) $5,976,982
============ ============
NET INCOME (LOSS) PER SHARE:
Basic $(0.54) $0.55
============ ============
Diluted $(0.54) $0.48
============ ============
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
Basic 9,129,169 10,841,665
============ ============
Diluted 9,129,169 13,711,597
============ ============
CONTANGO OIL & GAS COMPANY AND SUBSIDIARIES
OPERATING AND FINANCIAL STATISTICS
Year Ended June 30,
-------------------------
2003 2002
------------ ------------
Production:
Natural gas (thousand cubic feet) 6,016,395 6,981,909
Oil and condensate (barrels) 138,569 186,274
Total (thousand cubic feet equivalent) 6,847,809 8,099,553
Natural gas (per thousand cubic feet per
day) 16,483 19,129
Oil and condensate (per barrels per day) 380 510
Total (per thousand cubic feet equivalent
per day) 18,763 22,189
Average sales price:
Natural gas (thousand cubic feet) $5.00 $2.94
Oil and condensate (barrels) $27.90 $21.44
Total (thousand cubic feet equivalent) $4.95 $3.03
Selected data per Mcfe:
Production and severance taxes $0.35 $0.20
Lease operating expense $0.48 $0.28
General and administrative expense $0.30 $0.36
Depreciation, depletion and amortization
of natural gas and oil properties $1.24 $1.05
EBITDAX (1) $20,900,941 $22,485,600
(1) EBITDAX represents earnings before interest, income taxes,
depreciation, depletion and amortization, impairment expenses,
exploration expenditures, including gain (loss) from hedging
activities. We have reported EBITDAX because we believe EBITDAX is
a measure commonly reported and widely used by investors as an
indicator of a company's operating performance and ability to
incur and service debt. We believe EBITDAX assists investors in
comparing a company's performance on a consistent basis without
regard to depreciation, depletion and amortization, impairment of
natural gas and oil properties and exploration expenses, which can
vary significantly depending upon accounting methods. EBITDAX is
not a calculation based on the U.S. generally accepted accounting
principles and should not be considered an alternative to net
income (loss) in measuring our performance or used as an exclusive
measure of cash flow because it does not consider the impact of
working capital growth, capital expenditures, debt principal
reductions and other sources and uses of cash, which are disclosed
in our statements of cash flows. Investors should carefully
consider the specific items included in our computation of
EBITDAX. While we have disclosed our EBITDAX to permit a more
complete comparative analysis of our operating performance and
debt servicing ability relative to other companies, investors
should be cautioned that EBITDAX as reported by us may not be
comparable in all instances to EBITDAX as reported by other
companies. EBITDAX amounts may not be fully available for
management's discretionary use, due to requirements to conserve
funds for capital expenditures, debt service, preferred stock
dividends and other commitments.
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