Contango Oil & Gas Affiliates Apparent High Bidders on Five Gulf of Mexico Lease Blocks.

Energy Editors/Business Editors

HOUSTON--(BUSINESS WIRE)--March 21, 2003

Contango Oil & Gas Company (AMEX:MCF) announced today that two affiliated companies were the apparent high bidders on five blocks offered at the Central Gulf of Mexico Lease Sale #185 held March 19, 2003 in New Orleans. An apparent high bid ("AHB") gives the bidding party propriety 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 AHBs will be known.

Contango's 33% owned affiliate, Republic Exploration LLC ("Republic"), had the AHB on the following lease block:

  Block                      Republic's WI      Total Bid
  -----                      -------------      ---------
West Cameron 174                 100%            $858,800

Contango's 67% owned affiliate, Contango Offshore Exploration ("COE"), had the AHB on four lease blocks with bids totaling $777,600 as follows:

    Block                   COE's WI    Total Bid
    -----                   --------    ---------
Vermilion 231                100%       $120,200
Viosca Knoll 161             100%        366,100
Viosca Knoll 167             100%        152,500
Eugene Island 209            100%        138,800
                                        --------
                                        $777,600
                                        ========

If these blocks are awarded, Contango will own interests, both directly and indirectly vis-a-vis its affiliates, in 18 federal and state lease blocks in the Gulf of Mexico.

Kenneth R. Peak, chairman and chief executive officer, said, "Our offshore exploration continues to grow. We are encouraged by the preliminary results of our second Eugene Island 110 well and anticipate production commencing this summer with payout projected to occur in 2004. We also anticipate spudding a well at our Viosca Knoll 211 prospect this summer. In our onshore South Texas exploration play we have drilled three discoveries in five attempts and have another four to six wells planned. Our onshore wells are projected to add approximately 1.5 MMcfd of net production to our current approximate 15 MMcfd. Cash flow is strong with over $8.0 million projected for our third quarter ending March 31, 2003."

Contango is an independent natural gas and oil company that explores for, develops, produces and sells natural gas and crude oil. Contango's exploration and production efforts are currently focused onshore on the Gulf Coast and offshore in the Gulf of Mexico.

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.