Contango Reports First Quarter Earnings.HOUSTON Houston, city (1990 pop. 1,630,553), seat of Harris co., SE Tex., a deepwater port on the Houston Ship Channel; inc. 1837. Economy The fourth largest city in the nation and the largest in the entire South and Southwest, Houston is a port of entry; -- 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. ) reported 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 September September: see month. 30, 2004 of $1.4 million, or $0.11 per basic share and $0.10 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. share, compared to a net income attributable to common stock for the three months ended September 30, 2003 of $2.9 million, or $0.31 per basic share and $0.25 per diluted share. Total revenues for the three months ended September 30, 2004 were $6.7 million. Total revenues for the three months ended September 30, 2003 were $8.3 million. EBITDAX Earnings Before Interest, Taxes, Depreciation, Depletion, Amortization, and Exploration Expenses - EBITDAX An indicator of a company's financial performance calculated as: for the three months ended September 30, 2004 was $5.0 million, down from EBITDAX for the three months ended September 30, 2003 of $8.0 million. Kenneth R. Peak, Contango's chairman and chief executive officer, said, "We anticipate our previously announced $50 million sale of substantially all of our south Texas properties to close prior to year end. We expect that after deducting net production revenues for the months of July July: see month. through October October: see month. and federal income taxes attributable to the sale, we will have net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $34 million. As previously reported, this cash will be used to fund any requirements associated with our 10% interest in our Freeport Freeport, city, Bahamas Freeport, city (1990 pop. 25,115), Grand Bahama Island, Bahamas. A popular resort area, it developed out of a 1955 agreement between the Bahamian colonial government and a private development company to create a free port and LNG LNG (liquefied natural gas): see under natural gas. terminal, plus fund working interests in our offshore and 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. exploration prospects. At this time, we have no debt and an available bank line of $20.4 million. We currently have one offshore well, Eugene Island Eugene Island is a submerged mountain 70-85 miles off the Louisiana coast in the Gulf of Mexico. The nearby oil field Eugene Island 330 is best known for its unusual depletion profile. According to the article "Sustainable Oil?" by Chris Bennett WorldNetDaily. 113B, being prepared for testing and will spud two south Texas onshore wells in the near future." 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 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 . Contango also owns a 10% partnership interest in Freeport LNG Development L.P., which is developing a 1.5 billion cubic feet per day LNG terminal in Freeport, Texas Freeport is a city in Brazoria County, Texas within the Houston–Sugar Land–Baytown Metropolitan Area and is situated in Southeast Texas. As of the 2000 U.S. Census, the city population was 12,708 and is about sixteen miles away from Angleton. , and a 32% interest in Contango Capital Partnership Management, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , which was formed to invest in the alternative energy venture capital market with a focus on environmentally preferred energy technologies. Additional information can be found on our Web page at www.contango.com. This press 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. 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 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 Contango's publicly available reports filed with the Securities and Exchange Commission.
CONTANGO OIL & GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
September 30,
-----------------------
2004 2003
----------- -----------
REVENUES:
Natural gas and oil sales $6,672,242 $8,252,504
Gain from hedging activities - 82,242
----------- -----------
Total revenues 6,672,242 8,334,746
----------- -----------
EXPENSES:
Operating expenses 851,862 1,652,229
Exploration expenses 810,905 1,356,113
Depreciation, depletion and amortization 1,729,903 1,793,836
Impairment of natural gas and oil properties 112,000 -
General and administrative expense 812,473 377,107
----------- -----------
Total expenses 4,317,143 5,179,285
----------- -----------
INCOME FROM OPERATIONS 2,355,099 3,155,461
Interest expense (48,976) (164,410)
Interest income 17,853 14,416
Gain on sale of marketable securities - 645,299
Gain (loss) on sale of assets and other (40,506) 1,054,605
----------- -----------
INCOME BEFORE INCOME TAXES 2,283,470 4,705,371
Provision for income taxes (800,570) (1,646,880)
----------- -----------
NET INCOME 1,482,900 3,058,491
Preferred stock dividends 105,000 150,000
----------- -----------
NET INCOME ATTRIBUTABLE
TO COMMON STOCK $1,377,900 $2,908,491
=========== ===========
NET INCOME PER SHARE:
Basic $0.11 $0.31
=========== ===========
Diluted $0.10 $0.25
=========== ===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 12,867,906 9,298,650
=========== ===========
Diluted 14,580,970 12,425,936
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CONTANGO OIL & GAS COMPANY AND SUBSIDIARIES
SELECTED FINANCIAL DATA
Three Months Ended
September 30,
-------------------------
2004 2003
------------ -----------
(Dollar amounts in 000s,
Financial Data: except per share amounts)
Revenues:
Natural gas and oil sales $6,672 $8,253
Gain from hedging activities - 82
------------ -----------
Total revenues $6,672 $8,335
Net income $1,483 $3,058
Preferred stock dividends 105 150
------------ -----------
Net income attributable to common stock $1,378 $2,908
============ ===========
Net income per share:
Basic $0.11 $0.31
Diluted $0.10 $0.25
Weighted average shares outstanding:
Basic 12,868 9,299
Diluted 14,581 12,426
EBITDAX (1) $4,967 $8,005
Production Data:
Natural gas (million cubic feet) 979 1,363
Oil and condensate (thousand barrels) 19 36
Total (million cubic feet equivalent) 1,093 1,579
Natural gas (thousand cubic feet per day) 10,641 14,814
Oil and condensate (barrels per day) 207 387
Total (thousand cubic feet equivalent per
day) 11,883 17,136
Average sales price:
Natural gas (per thousand cubic feet) $5.98 $5.29
Oil and condensate (per barrel) $42.27 $29.23
Selected data per Mcfe:
Production and severance taxes $(0.02) $0.37
Lease operating expenses $0.80 $0.67
General and administrative expenses $0.74 $0.24
Depreciation, depletion and amortization of
natural gas and oil properties $1.55 $1.12
(1) EBITDAX represents earnings before interest, income taxes,
depreciation, depletion and amortization, impairment expenses,
exploration expenses, including gain (loss) from hedging
activities, and sale of assets and other. 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 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.
A reconciliation of EBITDAX to income from operations for the periods
indicated is presented below.
Three Months Ended
September 30,
--------------------
2004 2003
---------- ---------
($000)
Income from operations $2,355 $3,155
Exploration expenses 811 1,356
Depreciation, depletion and amortization 1,730 1,794
Impairment of natural gas and oil properties 112 -
Gain on sale of marketable securities - 645
Gain (loss) on sale of assets and other (41) 1,055
---------- ---------
EBITDAX $4,967 $8,005
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