Contango Oil & Gas Company Announces Additional Reserve Acquisition in South Texas; Update of Operations.Business/Energy Editors HOUSTON--(BUSINESS WIRE)--April 1, 2002 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) announced today it has increased its ownership interest in its core South Texas Exploration Program ("STEP"). The $3.4 million acquisition, effective April 1, 2002, purchased an estimated 1.6 Bcfe of proved developed producing reserves for approximately $1.92 per Mmbtue. The acquisition is being funded under the Company's $19 million secured oil and gas revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility provided by Guaranty As a verb, to agree to be responsible for the payment of another's debt or the performance of another's duty, liability, or obligation if that person does not perform as he or she is legally obligated to do; to assume the responsibility of a guarantor; to warrant. Bank, FSB (FrontSide Bus) See system bus. FSB - front side bus and raises the Company's outstanding indebtedness to $18.2 million. Kenneth R. Peak, chairman and chief executive officer, said, "Since the first of the year, we have completed acquisitions at our core STEP properties totaling $23.4 million. The all in economics of these acquisitions are 12.9 Bcfe of proved developed producing reserves acquired at a cost of $1.81 per Mcfe, or $1.62 per Mmbtue. The all in economics of our STEP exploration activities, which includes seismic and leasehold costs, are 27.6 net Bcfe of proved developed producing reserves discovered at a cost of $1.41 per Mcfe, or $1.25 per Mmbtue. The Company's combined finding and development costs for exploration and acquisitions at STEP are 40.5 Bcfe of proved developed producing reserves at a cost of $1.54 per Mcfe, or $1.37 per Mmbtue. The Company's proved developed producing reserves as of April 1, 2002 are approximately 28.9 Bcfe (32 trillion btue). The Company's current net daily production is approximately 20 Mmcf of natural gas and 500 barrels. At anticipated production levels and current prices, our monthly EBITDAX Earnings Before Interest, Taxes, Depreciation, Depletion, Amortization, and Exploration Expenses - EBITDAX An indicator of a company's financial performance calculated as: through December 2002 is anticipated to be approximately $1.5 to $2.0 million." Mr. Peak further said, "With the recent rise in natural gas and crude prices, we have re-established a costless collar hedge position on a portion of our near term production. We have sold calls on 8 Mmbtud of natural gas production at a strike price of $4.02 per Mmbtu for the months of July through December 2002. The Company has purchased puts on 8 Mmbtud of natural gas production with a strike price of $3.00 per Mmbtu for the months of May through October 2002. In addition, we have sold approximately 33% of our crude oil production at $24.95 per barrel for the months of April through October 2002." Contango is a Houston-based, independent natural gas and oil company. The Company explores for and acquires natural gas and oil properties primarily onshore in the Gulf Coast, offshore 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 and the Rocky Mountains Rocky Mountains, major mountain system of W North America and easternmost belt of the North American cordillera, extending more than 3,000 mi (4,800 km) from central N.Mex. to NW Alaska; Mt. Elbert (14,431 ft/4,399 m) in Colorado is the highest peak. . Additional information can be found on our Web site at www.mcfx.biz. This news release contains forward-looking statements within the meaning of the Securities Litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called 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. |
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