-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MC5AGtmBBGPuUtBqDCq0yK3RKotauco4x3+yz26AQzfrUL57POpciDUFvXb4V8nq /H1NALsJ4g1kW+PNGxPoEA== 0001157523-05-004512.txt : 20050510 0001157523-05-004512.hdr.sgml : 20050510 20050509184113 ACCESSION NUMBER: 0001157523-05-004512 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050509 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050510 DATE AS OF CHANGE: 20050509 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONTANGO OIL & GAS CO CENTRAL INDEX KEY: 0001071993 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 954079863 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-16317 FILM NUMBER: 05813418 BUSINESS ADDRESS: STREET 1: 3700 BUFFALO SPEEDWAY SUITE 960 CITY: HOUSTON STATE: TX ZIP: 77098 BUSINESS PHONE: 7139601901 MAIL ADDRESS: STREET 1: 3700 BUFFALO SPEEDWAY SUITE 960 CITY: HOUSTON STATE: TX ZIP: 77098 FORMER COMPANY: FORMER CONFORMED NAME: MGPX VENTURES INC DATE OF NAME CHANGE: 19981013 8-K 1 a4884376.txt CONTANGO OIL AND GAS COMPANY UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) May 9, 2005 ----------- CONTANGO OIL & GAS COMPANY - ------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Its Charter) DELAWARE 001-16317 95-4079863 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 3700 BUFFALO SPEEDWAY, SUITE 960 HOUSTON, TEXAS 77098 (Address of principal executive offices) (713) 960-1901 (Registrant's telephone number, including area code) N/A (Former name or former address, if changed since last report) ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION On May 9, 2005, the Company announced financial results for the three and nine months ended March 31, 2005. Contango Oil & Gas Company (AMEX:MCF) reported 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, compared to net income attributable to common stock for the three months ended March 31, 2004 of $1.2 million, or $0.11 per basic and diluted share. Natural gas and oil sales from continuing and discontinued operations for the three months ended March 31, 2005 were $1 million, down from $6.6 million for the three months ended March 31, 2004. The decrease in revenue was primarily the result of the sale of our south Texas natural gas and oil interests for $50 million, completed in December 2004. The $1 million of revenue for the current quarter reflects primarily production from new reserves and production from south Texas properties not included in the sale. EBITDAX was $0.6 million for the three months ended March 31, 2005, down from EBITDAX for the three months ended March 31, 2004 of $5.6 million. Net income attributable to common stock for the nine months ended March 31, 2005 was $13.4 million, or $1.02 per basic and diluted share, compared to net income attributable to common stock for the nine months ended March 31, 2004 of $8.2 million, or $0.83 per basic and diluted share. Natural gas and oil sales from continuing and discontinued operations for the nine months ended March 31, 2005 were $15.0 million, down from $20.8 million for the nine months ended March 31, 2004. EBITDAX was $27.4 million for the nine months ended March 31, 2005, up from EBITDAX for the nine months ended March 31, 2004 of $24.0 million. ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits The following is a list of exhibits filed as part of this Form 8-K. Where so indicated by footnote, exhibits, which were previously filed, are incorporated by reference. Exhibit No. Description of Document - ----------- ---------------------- 99.1 Press release dated May 9, 2005. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CONTANGO OIL & GAS COMPANY Date: May 9, 2005 By: /s/ KENNETH R. PEAK -------------------------------------- Kenneth R. Peak Chairman and Chief Executive Officer EX-99.1 2 a4884376ex991.txt EXHIBIT 99.1 Exhibit 99.1 Contango Reports Third Quarter Earnings and Updates Operations HOUSTON--(BUSINESS WIRE)--May 9, 2005--Contango Oil & Gas Company (AMEX:MCF) reported 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, compared to net income attributable to common stock for the three months ended March 31, 2004 of $1.2 million, or $0.11 per basic and diluted share. Natural gas and oil sales from continuing and discontinued operations for the three months ended March 31, 2005 were $1 million, down from $6.6 million for the three months ended March 31, 2004. The decrease in revenue was primarily the result of the sale of our south Texas natural gas and oil interests for $50 million, completed in December 2004. The $1 million of revenue for the current quarter reflects primarily production from new reserves and production from south Texas properties not included in the sale. EBITDAX was $0.6 million for the three months ended March 31, 2005, down from EBITDAX for the three months ended March 31, 2004 of $5.6 million. Net income attributable to common stock for the nine months ended March 31, 2005 was $13.4 million, or $1.02 per basic and diluted share, compared to net income attributable to common stock for the nine months ended March 31, 2004 of $8.2 million, or $0.83 per basic and diluted share. Natural gas and oil sales from continuing and discontinued operations for the nine months ended March 31, 2005 were $15.0 million, down from $20.8 million for the nine months ended March 31, 2004. EBITDAX was $27.4 million for the nine months ended March 31, 2005, up from EBITDAX for the nine months ended March 31, 2004 of $24.0 million. We currently have approximately $34.8 million in cash, cash equivalents, and short term investments and have no debt. We currently have production of approximately 2,100 Mcf/d. Based on current prices and production rates, the Company anticipates EBITDAX of approximately $200,000 per month, net of estimated on-going general and administrative expenses of $200,000 per month. Kenneth R. Peak, Contango's Chairman and Chief Executive Officer, said, "As a result of the Company's increased liquidity stemming from our recent south Texas property sale, the Company is selectively increasing its risk exposure in certain onshore and offshore prospects. The Company will also for the first time operate two offshore prospects in the Gulf of Mexico through its wholly owned subsidiary, Contango Operators, Inc. Our estimated capital budget for exploration activities for the remainder of the calendar year 2005 is $21 million of which $12 million will be invested in just three prospects: our Fayetteville Shale acreage acquisition project in Arkansas at $4 million, and two offshore exploration prospects at $4 million each. While this shift in strategy greatly increases the potential loss to the Company from dry holes on these prospects, it may also significantly increase our potential profit should the wells be successful." Mr. Peak continued, "In the future, Contango expects to take working interests in additional prospects generated by its two partially owned subsidiaries, Republic Exploration and Contango Offshore Exploration. Contango will be offered these prospects under the same arms-length terms offered to industry participants. Some of these working interests may involve commitments by the Company of $5 million or more per prospect." CONTANGO OIL & GAS COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended Nine Months Ended March 31, March 31, ------------------------ ------------------------ 2005 2004 2005 2004 ------------ ----------- ------------ ----------- REVENUES: Natural gas and oil sales $1,031,081 $28,327 $3,036,677 $105,244 Gain from hedging activities - - - 58,171 ------------ ----------- ------------ ----------- Total revenues 1,031,081 28,327 3,036,677 163,415 ------------ ----------- ------------ ----------- EXPENSES: Operating expenses 82,106 51,547 335,079 102,576 Exploration expenses 1,970,442 1,394,253 3,702,781 4,670,794 Depreciation, depletion and amortization 322,550 6,202 942,172 21,002 Impairment of natural gas and oil properties 124,537 - 236,537 42,995 General and administrative expenses 620,738 662,898 2,520,262 1,808,478 ------------ ----------- ------------ ----------- Total expenses 3,120,373 2,114,900 7,736,831 6,645,845 ------------ ----------- ------------ ----------- (LOSS) FROM CONTINUING OPERATIONS (2,089,292) (2,086,573) (4,700,154) (6,482,430) Interest expense (93) (28,804) (71,410) (308,449) Interest income 168,466 12,263 201,822 31,929 Gain on sale of marketable securities - - - 710,322 Gain (loss) on sale of assets and other (12,346) 18,858 (99,166) 6,262,847 ------------ ----------- ------------ ----------- INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES (1,933,265) (2,084,256) (4,668,908) 214,219 (Provision) benefit for income taxes 676,642 729,489 1,634,118 (7,761) ------------ ----------- ------------ ----------- INCOME (LOSS) FROM CONTINUING OPERATIONS (1,256,623) (1,354,767) (3,034,790) 206,458 ------------ ----------- ------------ ----------- DISCONTINUED OPERATIONS Discontinued operations, net of income taxes 184,579 2,708,437 16,701,024 8,494,112 ------------ ----------- ------------ ----------- NET INCOME (LOSS) (1,072,044) 1,353,670 13,666,234 8,700,570 Preferred stock dividends 105,000 173,333 315,000 500,000 ------------ ----------- ------------ ----------- NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK $(1,177,044) $1,180,337 $13,351,234 $8,200,570 ============ =========== ============ =========== NET INCOME (LOSS) PER SHARE: Basic Continuing operations $(0.10) $(0.13) $(0.26) $(0.03) Discontinued operations 0.01 0.24 1.28 0.86 ------------ ----------- ------------ ----------- Total $(0.09) $0.11 $1.02 $0.83 ============ =========== ============ =========== Diluted Continuing operations $(0.10) $(0.13) $(0.26) $(0.03) Discontinued operations 0.01 0.24 1.28 0.86 ------------ ----------- ------------ ----------- Total $(0.09) $0.11 $1.02 $0.83 ============ =========== ============ =========== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: Basic 13,108,196 11,145,896 13,030,251 9,927,796 ============ =========== ============ =========== Diluted 13,108,196 11,145,896 13,030,251 9,927,796 ============ =========== ============ =========== 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, ------------------------ ------------------------- 2005 2004 2005 2004 ----------- ------------ ------------ ------------ Revenues $- $6,582,812 $11,951,278 $20,738,707 Operating expenses 254,609 (441,461) (935,420) (2,959,346) Depreciation expenses - (1,741,325) (1,583,358) (5,139,260) Exploration expenses - (343,246) (26,911) (554,703) Gain on sale of discontinued operations 29,358 110,046 16,288,294 982,467 ----------- ------------ ------------ ------------ Gain before income taxes $283,967 $4,166,826 $25,693,883 $13,067,865 Provision for income taxes (99,388) (1,458,389) (8,992,859) (4,573,753) ----------- ------------ ------------ ------------ Gain from discontinued operations, net of income taxes $184,579 $2,708,437 $16,701,024 $8,494,112 =========== ============ ============ ============ Production, Prices, Operating Expenses, and Other Three Months Ended Nine Months Ended March 31, March 31, ------------------- ------------------ 2005 2004 2005 2004 --------- -------- -------- -------- (Dollar amounts in (Dollar amounts in Production Data: 000s, except per 000s, except per Mcfe amounts) Mcfe amounts) Natural gas (million cubic feet) 120 1,007 2,030 3,415 Oil and condensate (thousand barrels) 5 20 44 78 Total (million cubic feet equivalent) 150 1,127 2,294 3,883 Natural gas (thousand cubic feet per day) 1,333 11,061 7,409 12,418 Oil and condensate (barrels per day) 56 221 161 283 Total (thousand cubic feet equivalent per day) 1,669 12,387 8,375 14,116 Average sales price: Natural gas (per thousand cubic feet) $6.32 $5.90 $6.40 $5.41 Oil and condensate (per barrel) $50.68 $33.44 $45.35 $30.57 Selected data per Mcfe: Production and severance taxes $(1.28) $0.02 $(0.18) $0.22 Lease operating expenses $0.15 $0.42 $0.74 $0.57 General and administrative expenses $4.14 $0.59 $1.10 $0.47 Depreciation, depletion and amortization of natural gas and oil properties $2.06 $1.52 $1.07 $1.30 EBITDAX (1) $600 $5,584 $27,386 $23,987 (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 operations 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: 2005 2004 2005 2004 --------- --------- --------- -------- (Dollar amounts in (Dollar amounts in 000s) 000s) (Loss) from continuing operations $(2,089) $(2,086) $(4,700) $(6,482) Exploration expenses 1,970 1,394 3,703 4,671 Depreciation, depletion and amortization 323 6 942 21 Impairment of natural gas and oil properties 124 - 236 43 Gain on sale of marketable securities - - - 710 Gain (loss) on sale of assets and other (12) 19 (99) 6,263 --------- --------- --------- -------- EBITDAX from continuing operations 316 (667) 82 5,226 Income from discontinued operations before taxes 284 4,167 25,694 13,068 Exploration expenses - 343 27 554 Depreciation, depletion and amortization - 1,741 1,583 5,139 --------- --------- --------- -------- EBITDAX $600 $5,584 $27,386 $23,987 ========= ========= ========= ======== 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. Contango also owns a 10% partnership interest in Freeport LNG Development L.P.; a 32% interest in Contango Capital Partnership Management, LLC, and a 25% interest in the Contango Capital Partners Fund, L.P., which were 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 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, 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. CONTACT: Contango Oil & Gas Company, Houston Kenneth R. Peak, 713-960-1901 www.contango.com -----END PRIVACY-ENHANCED MESSAGE-----