Contango Tests Positive Gas at Eloise-1

Contango Oil & Gas Company has announced that its production test at Eloise-1 was successfully completed. The well tested at a rate of approximately 8.3 million cubic feet equivalent per day. The net revenue interest in Eloise-1, net to Contango, is approximately 27.0%.

Contango’s independent third party engineer estimates this well to have proved reserves net to Contango of approximately 3.5 Billion cubic feet equivalent (“Bcfe”). Estimated costs net to Contango to drill, complete, and bring this well to full production status are approximately $16.3 million.

Marc Duncan, President and Chief Operating Officer of Contango Operators, Inc. said, “We will begin laying a pipeline and completing production facilities right away. Production from Eloise-1 is estimated to commence before year-end. Our rig is scheduled to move to Eugene Island 10 to drill our first rate acceleration well (Dutch-4). After that, our plans are to move the rig to our Mary Rose field and drill our second rate acceleration well (Mary Rose-5). After that we intend to move the rig to Eugene Island 56 and drill the first of two wildcat exploration prospects on that block.”

Kenneth R. Peak, Contango’s Chairman and Chief Executive Officer, said, “Our Eloise-1 well is only marginally economic, and obviously not what we were hoping for. All of our production has been shut-in since August 30, 2008, when we and the industry evacuated personnel due to Hurricane Gustav. We expect to be clear of Hurricane Ike by early next week, and expect to resume our production and drilling operations by the middle of the week. We have now purchased 70,354 shares under our stock repurchase program.”
 

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