Contango Reports Third Quarter Earnings and Updates Operations.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 March 31, 2006 of $0.7 million, or $0.05 per basic and 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 loss attributable to common stock for the three months ended March 31, 2005 of $1.2 million, or $0.09 per basic and diluted share. The increase was attributable to an increase in crude oil and natural gas prices and an increase in our oil production. Net income attributable to common stock for the nine months ended March 31, 2006 was $0.4 million, or $0.03 per basic and diluted share, compared to net income attributable to common stock for the nine months ended March 31, 2005 of $13.4 million, or $1.02 per basic and diluted share, which included a gain on the sale of discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. of $16.3 million, from the sale of our south Texas natural gas and oil interests that was completed in December December: see month. 2004. 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 March 31, 2006 was $2.1 million compared to $0.6 million for the three months ended March 31, 2005. EBITDAX for the nine months ended March 31, 2006 was $4.2 million compared to $27.4 million for the nine months ended March 31, 2005. Kenneth R. Peak, Contango's Chairman and Chief Executive Officer, said, "We expect to begin drilling our High Island A-279 ("Juice") and our West Delta 43 ("Skip Jack") prospects in June June: see month. , and our 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. 10 ("Dutch") prospect in July July: see month. . "In our Arkansas Arkansas, river, United States Arkansas (ärkăn`zəs, är`kənsô'), river, c.1,450 mi (2,330 km) long, rising in the Rocky Mts., central Colo. Fayetteville Fayetteville (fā`ĕtvĭl). 1 City (1990 pop. 42,099), seat of Washington co., NW Ark., in the Ozarks; inc. 1836. It is an agricultural trade center with canneries and food processors. The Univ. Shale Play, we and our operating group have acquired or received commitments on approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 42,000 net mineral acres. The Arkansas Oil & Gas Commission has now approved eleven of our 640-acre drilling units, which we estimate will allow our operating group to drill and operate approximately 100 horizontal horizontal /hor·i·zon·tal/ (hor?i-zon´t'l) 1. parallel to the plane of the horizon. 2. occupying or confined to a single level in a hierarchy. horizontal parallel to the plane of the horizon. wells. In addition, we have now been integrated into 35 wells that are being operated by a third party oil and gas exploration company, seven of which are producing. The remaining 28 horizontal wells are either being drilled or are expected to be drilled over the next three months. We recently logged 240 feet of net Fayetteville Shale in our first Alta ALTA Alberta (Canada) ALTA AltaVista (stock symbol) ALTA American Land Title Association ALTA American Literary Translators Association ALTA Atlanta Lawn Tennis Association operated well, the Alta Beck This article is about the musician. For other uses, see Beck (disambiguation). Beck Hansen (born Bek David Campbell, July 8, 1970) is a Grammy Award-winning American musician, singer-songwriter, and multi-instrumentalist, known by his simple stage name of #1-32H, and are currently drilling this well horizontally hor·i·zon·tal adj. 1. Of, relating to, or near the horizon. 2. a. Parallel to or in the plane of the horizon. b. At right angles to a vertical line. 3. . "On March 15, 2006, two affiliated companies Affiliated Companies A situation that occurs when one company owns a minority interest (less than 50%) in another company. Also refers to companies that are related to each other in some way. Notes: An affiliated company is sometimes referred to as a subsidiary. were the apparent high bidders on a total of 16 lease blocks at the Central 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 Lease Sale #198. We were recently awarded our 11th lease block from this sale, West Delta 77, bringing the total number of lease blocks Contango and its affiliates have to 62 offshore leases. "As of May 11, 2006, we have approximately $33 million in cash, cash equivalents, and short term investments. In addition, the Company has $10.0 million of unutilized borrowing capacity. Our principal focus will continue to be our deep shelf Gulf of Mexico and Fayetteville Shale exploration programs."
CONTANGO OIL & GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Nine Months Ended
March 31, March 31,
------------------------ ------------------------
2006 2005 2006 2005
----------- ------------ ----------- ------------
REVENUES:
Natural gas and
oil sales $123,199 $256,632 $315,274 $630,720
----------- ------------ ----------- ------------
Total revenues 123,199 256,632 315,274 630,720
----------- ------------ ----------- ------------
EXPENSES:
Operating expenses
(credits) 5,512 5,890 (11,216) 43,610
Exploration
expenses 152,011 1,741,322 978,682 3,014,786
Depreciation,
depletion and
amortization 11,909 98,884 99,032 266,205
Impairment of
natural gas and
oil properties 419,918 124,537 419,918 236,537
General and
administrative
expense 1,061,518 620,738 3,083,492 2,520,262
----------- ------------ ----------- ------------
Total expenses 1,650,868 2,591,371 4,569,908 6,081,400
----------- ------------ ----------- ------------
LOSS FROM CONTINUING
OPERATIONS BEFORE
OTHER INCOME AND
INCOME TAXES (1,527,669) (2,334,739) (4,254,634) (5,450,680)
OTHER INCOME
(EXPENSE):
Interest expense (93) (93) (285) (71,410)
Interest income 165,946 168,466 565,314 201,822
Gain (loss) on sale
of assets and other (18,519) (12,346) 223,167 (99,166)
----------- ------------ ----------- ------------
LOSS FROM CONTINUING
OPERATIONS BEFORE
INCOME TAXES (1,380,335) (2,178,712) (3,466,438) (5,419,434)
Benefit for income
taxes 524,792 762,549 1,326,191 1,896,802
----------- ------------ ----------- ------------
LOSS FROM CONTINUING
OPERATIONS (855,543) (1,416,163) (2,140,247) (3,522,632)
----------- ------------ ----------- ------------
DISCONTINUED
OPERATIONS
Discontinued
operations, net
of income taxes 1,754,965 344,119 3,032,583 17,188,866
----------- ------------ ----------- ------------
NET INCOME (LOSS) 899,422 (1,072,044) 892,336 13,666,234
Preferred stock
dividends 150,000 105,000 451,000 315,000
----------- ------------ ----------- ------------
NET INCOME (LOSS)
ATTRIBUTABLE
TO COMMON STOCK $749,422 $(1,177,044) $441,336 $13,351,234
=========== ============ =========== ============
NET INCOME (LOSS) PER SHARE:
Basic
Continuing
operations $(0.07) $(0.12) $(0.18) $(0.30)
Discontinued
operations 0.12 0.03 0.21 1.32
----------- ------------ ----------- ------------
Total $0.05 $(0.09) $0.03 $1.02
=========== ============ =========== ============
Diluted
Continuing
operations $(0.07) $(0.12) $(0.18) $(0.30)
Discontinued
operations 0.12 0.03 0.21 1.32
----------- ------------ ----------- ------------
Total $0.05 $(0.09) $0.03 $1.02
=========== ============ =========== ============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 14,865,965 13,108,196 14,675,586 13,030,251
=========== ============ =========== ============
Diluted 14,865,965 13,108,196 14,675,586 13,030,251
=========== ============ =========== ============
The summarized financial results for discontinued operations for each of the periods ended March 31, are as follows:
Operating Results: Three Months Ended Nine Months Ended
March 31, March 31,
------------------------- -------------------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
Revenues $1,555,134 $774,449 $4,377,017 $14,357,236
Operating
(expenses) credits
(a) 466,362 178,392 1,266,320 (1,226,890)
Depreciation
expense (380,000) (223,666) (966,734) (2,259,325)
Exploration expense - (229,119) (1,093,139) (714,906)
Gain on sale of
discontinued
operations 1,058,450 29,358 1,082,048 16,288,294
------------ ------------ ------------ ------------
Gain before
income taxes 2,699,946 529,414 4,665,512 26,444,409
Provision for
income taxes (944,981) (185,295) (1,632,929) (9,255,543)
------------ ------------ ------------ ------------
Gain from
discontinued
operations, net of
income taxes $1,754,965 $344,119 $3,032,583 $17,188,866
============ ============ ============ ============
(a) credit due to severance tax refunds
Production, Prices, Operating Expenses, and Other
Three Months Ended Nine Months Ended
March 31, March 31,
--------------------- ---------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
(Dollar amounts in (Dollar amounts in
000s, except average 000s, except average
Production Data: sales price and per sales price and per
Mcfe amounts) Mcfe amounts)
Natural gas (million cubic
feet) 116 120 342 2,030
Oil and condensate
(thousand barrels) 13 5 28 44
Total (million cubic feet
equivalent) 194 150 510 2,294
Natural gas (thousand
cubic feet per day) 1,289 1,333 1,248 7,409
Oil and condensate
(barrels per day) 144 56 102 161
Total (thousand cubic feet
equivalent per day) 2,153 1,669 1,860 8,375
Average sales price:
Natural gas (per
thousand cubic feet) $8.00 $6.32 $9.14 $6.40
Oil and condensate (per
barrel) $58.17 $50.68 $56.89 $45.35
Selected data per Mcfe:
Severance taxes $(2.89) $(1.28) $(2.89) $(0.18)
Lease operating expenses $0.51 $0.15 $0.37 $0.74
General and
administrative expenses $5.49 $4.08 $6.08 $1.10
Depreciation, depletion
and amortization of
natural gas and oil
properties $1.96 $2.06 $1.99 $1.07
EBITDAX (1) $2,117 $600 $4,192 $27,386
(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 loss from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the and operating results for discontinued operations for the periods indicated is presented below.
Three Months Ended Nine Months Ended
March 31, March 31,
------------------- -------------------
Reconciliation of EBITDAX: 2006 2005 2006 2005
--------- --------- --------- ---------
(Dollar amounts (Dollar amounts
in 000s) in 000s)
(Loss) from continuing
operations before other
income and income taxes $(1,528) $(2,335) $(4,255) $(5,451)
Exploration expenses 152 1,741 979 3,015
Depreciation, depletion and
amortization 12 99 99 266
Impairment of natural gas and
oil properties 420 125 420 237
Gain (loss) on sale of assets
and other (19) (12) 223 (99)
--------- --------- --------- ---------
EBITDAX from continuing
operations (963) (382) (2,534) (2,032)
Gain from discontinued
operations before taxes 2,700 529 4,666 26,444
Exploration expenses - 229 1,093 715
Depreciation, depletion and
amortization 380 224 967 2,259
--------- --------- --------- ---------
EBITDAX $2,117 $600 $4,192 $27,386
========= ========= ========= =========
Contango is a Houston-based, independent natural gas and oil company. The Company's core business is to explore, develop, produce and acquire natural gas and oil properties primarily offshore in the Gulf of Mexico 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. in the Arkansas Fayetteville Shale. As a recent addition to our business, we now operate certain offshore prospects through our wholly-owned subsidiary, Contango Operators, Inc. ("COI COI n abbr (BRIT) (= Central Office of Information) → servicio de información gubernamental COI n abbr (Brit) (= Central Office of Information) → "). The Company also owns a 10% interest in a limited partnership formed to develop an LNG LNG (liquefied natural gas): see under natural gas. receiving 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 holds investments in companies focused on commercializing 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. |
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