Contango Executes Agreement for Seismic Shoot and Exploration in Duval County, Texas.
HOUSTON--(BUSINESS WIRE)--July 23, 2003
Contango Oil & Gas Company (AMEX:MCF) announced that it and Alta Resources, LLC have entered into an agreement with Seitel Data Ltd. for a 3-D seismic shoot covering 39 square miles in southern Duval County, Texas. The estimated cost to Contango for the shoot is approximately $1.7 million. The seismic shoot is scheduled for completion by November 2003, and processing, evaluation and prospect identification is expected by January 2004. As part of the participation agreement between Contango and Alta, Contango will receive a 50% working interest (an approximate 32% net revenue interest) in natural gas and oil leases owned by Alta in Duval County, Texas and will have the right to participate in any wells drilled on identified prospects.
Kenneth R Peak, Contango's Chairman and Chief Executive Officer, said, "Alta Resources generated this exploration play, and we are pleased to have the opportunity to work with both Seitel and Alta. Operationally, our EBITDAX continues to average between $2.5 - $3.0 million per month. Higher commodity prices appear to be increasing the opportunities available to Contango and the industry. We are currently evaluating another new 3-D seismic shoot as well as two high-quality ready-to-drill prospects."
Joseph G. Greenberg, President of Alta Resources, said, "Alta Resources has leased approximately 9,000 acres directly on trend with two nearby Queen City discoveries with initial production between 5 and 8 MMcfd of natural gas per well. Alta has identified multiple prospects on the acreage using advanced processing of vintage 2-D data. We welcome the experience that both Contango and Seitel bring to the play."
Larry Lenig, Chief Executive Officer of Seitel, said, "We are very pleased to have been selected to work with Alta and Contango on this project. The shoot complements Seitel's existing database and leverages our experience in undertaking and managing new surveys in conjunction with aggressive and growth oriented exploration and production companies. The new survey extends two existing Seitel surveys in the area, and when completed, will provide more than 125 square miles of contiguous 3-D coverage."
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. Contango also own a 10% partnership interest in a proposed LNG terminal in Freeport, Texas. Additional information can be found on our web page at www.mcfx.biz.
Seitel Data Ltd. is a wholly owned subsidiary of Seitel, Inc. (OTCBB:SEIE) (TORONTO:OSL) and markets its proprietary seismic information to more than 400 petroleum companies, licensing data from its library and creating new seismic surveys under multi-client projects. Seitel has announced that it filed a joint plan of reorganization with the Delaware Bankruptcy Court. The reorganization plan is to be financed by Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B). As a result of this funding, if the reorganization plan is confirmed and consummated, Seitel will become a wholly owned subsidiary of Berkshire Hathaway. Berkshire Hathaway is a holding company owning subsidiaries engaged in a number of diverse business activities, the most important of which is the property and casualty insurance business conducted on both a direct and reinsurance basis through a number of subsidiaries.
Alta Resources, LLC is a Houston-based, private exploration and production company.
This news release contains forward-looking statements within the meaning of the Securities Litigation Reform Act. The statements reflect the Company's current views with respect to future events that involve risks and uncertainties including uncertainties 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 the Company's publicly available SEC reports. In light of these risks and uncertainties, the forward-looking events described in this release might not occur. EBITDAX represents earnings before interest, income taxes, depreciation, depletion and amortization, 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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|Date:||Jul 24, 2003|
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