Houston-based Contango Oil & Gas Company says that the Company’s Dutch and Mary Rose fields are currently producing at an 8/8ths rate of approximately 227 million cubic feet equivalent per day (Mmcfed) or, approximately 84 Mmcfed net to Contango. The workover on Mary Rose #1 well is now complete and the company is in the process of installing line heaters at its Eugene Island 11 H platform, which will increase production rate in the March/April time frame.

The Company says that under our $100 million share repurchase program, we have thus far purchased 923,854 shares of common stock, at an average price of $44.60 per share, for a total expenditure of approximately $41.2 million. Using our December 31, 2008 reserve report of 364 Bcfe, and today’s fully diluted shares of approximately 16.8 million, we have thus “purchased” 19.7 Bcfe at an average cost of $2.12 per Mcfe. At today’s approximate $35.00 per share stock price, we are purchasing proved developed Mcfe’s for approximately $1.67/Mcfe.

Kenneth R. Peak, the Company’s Chairman and Chief Executive Officer, said, “At June 2001, after we listed on the American Stock Exchange, we had no debt, 11.4 Bcfe in reserves, and 16.0 million fully diluted shares. Today, some 8 ½ years later, we still have no debt, have grown reserves by 350 Bcfe, yet we have only increased our fully diluted share count by some 815,000 shares.”

Mr. Peak continued, “The reward/risk ratio now strongly favors our aggressively continuing our share repurchase program and we have thus decided to delay indefinitely the drilling of our two other planned wildcat exploration wells, Eugene Island 56 #2 (“High Country East”) and Ship Shoal 263 (Nautilus). With our all in LOE costs, including severance taxes, of less than $1.00/Mcfe, $0 interest costs, and a $6.0 million budgeted G&A cost, our capex capital will be focused on our share repurchase program.”

Tags: Contango Oil & Gas Company