Contango Oil & Gas Company Announces First Quarter Results.Business/Energy Editors HOUSTON--(BUSINESS WIRE)--Nov. 13, 2001 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. ) announced net income attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to common stock for the three months ended Sept. 30, 2001 of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $4.3 million, or $0.38 per basic common share and $0.31 per 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. common share. Natural gas and oil sales for the three months ended Sept. 30, 2001 were approximately $5.8 million. After reflecting a gain from hedging activities of approximately $4.5 million, total revenues for the three months ended Sept. 30, 2001 were approximately $10.3 million. EBITDAX Earnings Before Interest, Taxes, Depreciation, Depletion, Amortization, and Exploration Expenses - EBITDAX An indicator of a company's financial performance calculated as: (earnings before interest expense, taxes, depreciation, depletion depletion n. when a natural resource (particularly oil) is being used up. The annual amount of depletion may, ironically, provide a tax deduction for the company exploiting the resource because if the resource they are exploiting runs out, they will no longer be able and amortization, impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. expense and expensed exploration expenditures) for the three months ended Sept. 30, 2001 was approximately $9.4 million. For the three months ended Sept. 30, 2000, Contango reported net income attributable to common stock of approximately $188,100, or $0.02 per basic and diluted common share. Total revenues for the period were approximately $2.1 million. Kenneth R. Peak, chairman and chief executive officer, said, "Contango had an excellent quarter. Natural gas and oil production increased from 420 million cubic feet of natural gas equivalents for the three months ended Sept. 30, 2000 to 1,779 million cubic feet of natural gas equivalents for the three months ended Sept. 30, 2001. This increase was due to the drilling success we have experienced in south Texas over the past year. We only have another three to five additional locations to drill in south Texas, and with the drilling of these wells, our current exploratory activities in south Texas will end." Mr. Peak further said, "The results of the quarter were substantially enhanced by an approximate ap·prox·i·mate v. To bring together, as cut edges of tissue. adj. 1. Relating to the contact surfaces, either proximal or distal, of two adjacent teeth; proximate. 2. Close together. $4.5 million gain on hedging activities, consisting of approximately $3.7 million realized on derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. agreements during the period and approximately $794,000 of mark to market gain. Although this gain significantly improved our earnings and cash position during the quarter, it is unlikely that such hedging results will be repeated in the future. As part of our overall risk management strategy, we currently have a significant portion of our 2002 and 2003 expected natural gas production hedged at average prices in excess of $3.00 per Mmbtu. Our liquidity remains strong with cash on hand of approximately $8.4 million and unused borrowing capacity currently at $8.0 million." In additional comments, Mr. Peak noted that a successful natural gas well has recently been drilled 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 on High Island 25L. Contango's 33.3% owned affiliate, Republic Exploration, has a reversionary re·ver·sion·ar·y also re·ver·sion·al adj. Law Of or connected with the reversion of an estate. Adj. 1. reversionary back-in after payout pay·out n. 1. The act or an instance of paying out. 2. A percentage of corporate earnings that is paid as dividends to shareholders. on this well. It is expected that production will commence in the spring of 2002 after production facilities are completed. Contango is a Houston-based, independent natural gas and oil company. The Company explores and acquires natural gas and oil properties primarily 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. in the Gulf Coast, offshore Gulf of Mexico 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 page at www.contango-oandg.com. This news 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. 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 Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the , 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 for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. events described in this release might not occur.
CONTANGO OIL & GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
Sept. 30,
------------------------------
2001 2000
------------ ------------
REVENUES:
Natural gas and oil sales $5,782,857 $2,081,734
Gain from hedging activities 4,483,659 --
------------ ------------
Total revenues 10,266,516 2,081,734
------------ ------------
EXPENSES:
Operating expenses 625,053 208,835
Exploration expenses 889,613 681,000
Depreciation, depletion and
amortization 1,579,482 570,736
General and administrative
expense 379,817 464,882
------------ ------------
Total expenses 3,473,965 1,925,453
------------ ------------
INCOME FROM OPERATIONS 6,792,551 156,281
Interest expense (9,317) (1,174)
Interest income 40,773 57,618
Gain on sale of assets 54,047 --
------------ ------------
INCOME BEFORE INCOME TAXES 6,878,054 212,725
Provision for income taxes 2,407,319 --
------------ ------------
NET INCOME 4,470,735 212,725
Preferred stock dividends 150,000 24,658
------------ ------------
NET INCOME ATTRIBUTABLE
TO COMMON STOCK $4,320,735 $188,067
============ ============
NET INCOME PER SHARE:
Basic $0.38 $0.02
============ ============
Diluted $0.31 $0.02
============ ============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING:
Basic 11,502,332 10,724,465
============ ============
Diluted 14,414,119 11,523,275
============ ============
CONTANGO OIL & GAS COMPANY AND SUBSIDIARIES
OPERATING AND FINANCIAL STATISTICS
Three Months Ended
Sept. 30,
------------------------
2001 2000
--------- --------
Production:
Natural gas (thousand
cubic feet) 1,526,435 312,000
Oil and condensate (barrels) 42,037 18,000
Total (thousand cubic feet
equivalent) 1,778,657 420,000
Natural gas (thousand cubic
feet per day) 16,592 3,391
Oil and condensate (barrels
per day) 457 196
Total (thousand cubic feet
equivalent per day) 19,334 4,567
Average sales price:
Natural gas (thousand
cubic feet) $3.11 $4.95
Oil and condensate (barrels) 24.74 29.79
Total (thousand cubic feet
equivalent) 3.26 4.96
Operating expenses (per
thousand cubic feet equivalent):
Production and severance taxes $0.22 $0.30
Lease operating expense
(before taxes) 0.13 0.20
------ ------
Total operating expenses $0.35 $0.50
Other expenses (per thousand
cubic feet equivalent):
Depreciation, depletion and
amortization of natural gas and
oil properties $0.88 $1.36
General and administrative
expense 0.21 1.11
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