Contango Shuts In EI-11H Platform after Pipeline Rupture

Contango Oil & Gas announced that on February 24, 2010, at approximately 7:30AM, a dredge contracted by the Army Corps of Engineers to dredge the Atchafalaya River Channel ruptured its 20" pipeline that runs from the EI-11 gathering platform to the EI-63 platform where Contango's pipeline joins a pipeline that transports production to shore. Contango immediately implemented our spill response plan.

United States Coast Guard investigators, inspectors and pollution response personnel boarded the dredge this morning immediately after the incident. Contango was advised that the private company that was performing the dredging had three individuals with minor injuries that have been treated. The company has notified all applicable state and federal agencies and our insurance carrier.

The ruptured pipeline transports production from Contango's four Mary Rose wells, its Dutch #4 well, and its Eloise North well and all six wells were immediately shut-in upon pipeline rupture. At the time of the incident, the pipeline was flowing approximately 125 million cubic
feet equivalent per day ("Mmcfed"), or 45 Mmcfed net to Contango. The company has provided notice of Force Majeure to all applicable parties. Production from its Dutch #1, #2, #3 wells goes to the EI-24 platform and is unaffected and is currently flowing at approximately 27 Mmcfed, net to Contango.

Kenneth R. Peak, Contango's Chairman and Chief Executive Officer, said, "We are fortunate that we have received no reports of serious injury and any environmental impact at this time appears to be minimal. We have worked closely with the Army Corps of Engineers, the United States Coast Guard, and the Minerals Management Service and are gratified by the assistance we have received. A fly-over by our crew spotted a light sheen that they estimated at less than a barrel. Repair vessels and a diving crew are en-route to the location to assess the extent of the damage to our pipeline. We expect to have divers on scene today (February 25th) to give us a visual examination and our first estimate of the extent of the damage to our pipeline. We will issue a follow-up press release with more details when we have an estimate of the cost and time to repair the pipeline."

 

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