Contango Reports Third Quarter Results and Updates Operations

HOUSTON--(Business Wire)--
Contango Oil & Gas Company (NYSE Amex:MCF) reported revenues from sales of
natural gas, oil and natural gas liquids for the three months ended March 31,
2009 of approximately $36.1 million, compared to $20.8 million for the same
period last year. The Company reported net income from continuing operations for
the three months ended March 31, 2009 of approximately $0.8 million, or $0.05
per basic and diluted share. This compares to net income from continuing
operations for the three months ended March 31, 2008 of $43.8 million or $2.69
per basic share and $2.56 per diluted share.

For the nine months ended March 31, 2009, the Company reported revenues from
sales of natural gas, oil and natural gas liquids of approximately $154.4
million, compared to $47.3 million for the same period last year. The Company
reported net income from continuing operations for the nine months ended March
31, 2009 of approximately $50.7 million, or $3.06 per basic share and $3.01 per
diluted share. This compares to net income from continuing operations for the
nine months ended March 31, 2008 of $56.6 million or $3.45 per basic shares and
$3.30 per diluted share.

The Company is currently producing approximately 101 million cubic feet
equivalent per day, net to Contango. Our Mary Rose #2 well is shut-in and
undergoing a workover.

The Company has $27.0 million of cash and no debt.

CONTANGO OIL & GAS COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three Months Ended Nine Months Ended
March 31, March 31,
2009 2008 2009 2008
REVENUES:
Natural gas, oil and liquids sales $ 36,133,376 $ 20,779,574 $ 154,370,771 $ 47,256,798
Total revenues 36,133,376 20,779,574 154,370,771 47,256,798

EXPENSES:
Operating expenses 4,553,421 1,482,578 14,505,666 3,159,695
Exploration expenses 12,756,737 4,261,686 20,387,619 5,171,795
Depreciation, depletion and amortization 8,919,740 4,077,017 22,167,167 6,002,997
Lease expirations and relinquishments 3,678,708 245,361 4,125,125 245,361
Impairment of natural gas and oil properties 2,709,239 591,737 2,709,239 591,737
General and administrative expenses 1,490,401 2,209,844 5,993,640 5,307,486
Total expenses 34,108,246 12,868,223 69,888,456 20,479,071
NET INCOME FROM CONTINUING OPERATIONS BEFORE OTHER INCOME AND INCOME TAXES 2,025,130 7,911,351 84,482,315 26,777,727

OTHER INCOME (EXPENSE):
Interest expense - net of interest capitalized (147,392 ) (1,425,715 ) (589,812 ) (3,585,074 )
Interest income 154,058 914,826 757,571 1,763,335
Gain on sale of assets and other - 59,919,478 - 62,034,996

NET INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 2,031,796 67,319,940 84,650,074 86,990,984
Provision for income taxes (1,184,182 ) (23,557,442 ) (33,965,501 ) (30,431,664 )
NET INCOME FROM CONTINUING OPERATIONS 847,614 43,762,498 50,684,573 56,559,320

DISCONTINUED OPERATIONS
Discontinued operations, net of income taxes - 68,981,433 - 174,079,822
NET INCOME 847,614 112,743,931 50,684,573 230,639,142
Preferred stock dividends - 345,000 - 1,245,000
NET INCOME ATTRIBUTABLE TO COMMON STOCK $ 847,614 $ 112,398,931 $ 50,684,573 $ 229,394,142

NET INCOME PER SHARE:
Basic
Continuing operations $ 0.05 $ 2.69 $ 3.06 $ 3.45
Discontinued operations - 4.28 - 10.85
Total $ 0.05 $ 6.97 $ 3.06 $ 14.30
Diluted
Continuing operations $ 0.05 $ 2.56 $ 3.01 $ 3.30
Discontinued operations - 4.03 - 10.15
Total $ 0.05 $ 6.59 $ 3.01 $ 13.45

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 16,162,928 16,122,707 16,543,485 16,045,785
Diluted 16,466,988 17,127,187 16,857,136 17,155,007

Production, Prices, Operating Expenses, and Other

Three Months Ended Nine Months Ended
March 31, March 31,
2009 2008 2009 2008
(Dollar amounts in 000's, (Dollar amounts in 000's,
except per Mcfe amounts) except per Mcfe amounts)
Production Data:
Natural gas (million cubic feet) 5,583 1,555 15,458 4,651
Oil and condensate (thousand barrels) 148 38 363 95
Natural gas liquids (thousand gallons) 3,534 1,403 4,573 2,218
Total (million cubic feet equivalent) 6,976 1,983 18,289 5,538

Natural gas (million cubic feet per day) 62.0 17.1 56.4 16.9
Oil and condensate (thousand barrels per day) 1.6 0.4 1.3 0.3
Natural gas liquids (thousand gallons per day) 39.3 15.4 16.7 8.1
Total (million cubic feet equivalent per day) 77.2 21.7 66.6 19.9

Average Sales Price:
Natural gas (per thousand cubic feet) $ 4.93 $ 7.35 $ 7.99 $ 7.69
Oil and condensate (per barrel) $ 41.53 $ 102.48 $ 73.02 $ 87.22
Natural gas liquids (per gallon) $ 0.70 $ 1.56 $ 0.96 $ 1.45

Selected data per Mcfe:
Lease operating expenses (including severence taxes) $ 0.65 $ 0.75 $ 0.79 $ 0.57
General and administrative expenses $ 0.21 $ 1.12 $ 0.33 $ 0.96
Depreciation, depletion and amortization of natural gas and oil properties $ 1.26 $ 2.00 $ 1.17 $ 1.01

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. Additional
information can be found on our web page at www.contango.com.

This press release contains forward-looking statements regarding Contango that
are intended to be covered by the safe harbor "forward-looking statements"
provided by the Private Securities Litigation Reform Act of 1995, based on
Contango`s current expectations and includes statements regarding acquisitions
and divestitures, estimates of future production, future results of operations,
quality and nature of the asset base, the assumptions upon which estimates are
based and other expectations, beliefs, plans, objectives, assumptions,
strategies or statements about future events or performance (often, but not
always, using words such as "expects", "projects", "anticipates", "plans",
"estimates", "potential", "possible", "probable", or "intends", or stating that
certain actions, events or results "may", "will", "should", or "could" be taken,
occur or be achieved). Statements concerning oil and gas reserves also may be
deemed to be forward looking statements in that they reflect estimates based on
certain assumptions that the resources involved can be economically exploited.
Forward-looking statements are based on current expectations, estimates and
projections that involve a number of risks and uncertainties, which could cause
actual results to differ materially from those, reflected in the statements.
These risks include, but are not limited to: the risks of the oil and gas
industry (for example, operational risks in exploring for, developing and
producing crude oil and natural gas; risks and uncertainties involving geology
of oil and gas deposits; the uncertainty of reserve estimates; the uncertainty
of estimates and projections relating to future production, costs and expenses;
potential delays or changes in plans with respect to exploration or development
projects or capital expenditures; health, safety and environmental risks and
risks related to weather such as hurricanes and other natural disasters);
uncertainties as to the availability and cost of financing; fluctuations in oil
and gas prices; risks associated with derivative positions; inability to realize
expected value from acquisitions, inability of our management team to execute
its plans to meet its goals, shortages of drilling equipment, oil field
personnel and services, unavailability of gathering systems, pipelines and
processing facilities and the possibility that government policies may change or
governmental approvals may be delayed or withheld. Additional information on
these and other factors which could affect Contango`s operations or financial
results are included in Contango`s other reports on file with the Securities and
Exchange Commission. Investors are cautioned that any forward-looking statements
are not guarantees of future performance and actual results or developments may
differ materially from the projections in the forward-looking statements.
Forward-looking statements are based on the estimates and opinions of management
at the time the statements are made. Contango does not assume any obligation to
update forward-looking statements should circumstances or management's estimates
or opinions change.

Contango Oil & Gas Company
Kenneth R. Peak, 713-960-1901
www.contango.com

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