Contango Oil & Gas Company Announces Reserve Acquisition and Expanded Credit Facility.Business/Energy Editors HOUSTON--(BUSINESS WIRE)--Jan. 8, 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 that it has increased its ownership interest in its core South Texas Exploration Property (STEP) with the acquisition of 6.1BCFE BCFE Boundary Committee for England BCFE Ballyfermot College of Further Education (Dublin, Ireland) BCFE Board Certified Forensic Examiner Bcfe Billions of Cubic Feet Equivalent (Per Day; Gas Exploration) of proved developed producing reserves at a price of $11 million or approximately $1.61/Mmbtue. The acquisition is being funded with cash on hand and increased availability under an expanded $17 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 Bank. Contango also expects to close an additional $4 million acquisition of STEP proved developed producing reserves in two separate transactions scheduled for April and June of this year. The actual acquisition prices will be based on natural gas and crude prices in effect at the time of the anticipated April and June closings. Kenneth R. Peak, chairman and chief executive officer, said, "This acquisition comes at an opportune time and dovetails well with our growth strategy. I believe we are at the bottom in the interest rate cycle and nearing a bottom in natural gas prices. Thus, this acquisition allows us to leverage our balance sheet at relatively low interest costs -- 3.9% is our initial LIBOR LIBOR See: London Interbank Offered Rate LIBOR See London interbank offered rate (LIBOR). based advance rate -- with anticipated natural gas price increases in the future. As a result of this acquisition and our successful STEP exploration program, which has one remaining exploration well to be drilled, we have handily hand·i·ly adv. 1. In an easy manner. 2. In a convenient manner. Adv. 1. handily - in a convenient manner; "the switch was conveniently located" conveniently 2. replaced our expected production of 6.5 BCFE for the fiscal year ending June 30, 2002. Our current production of approximately 15 Mcfed will be increased to approximately 20 Mcfed with no increase in G&A costs." Contango is a Houston-based, independent natural gas and oil company. The Company explores 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. Additional information can be found on our Web page at www.contango-oandg.com. 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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