Contango announced that its Dude prospect (Matagorda Island 617) and Paisano prospect (Vermillion 155) are both dry holes. We are currently drilling ahead on our Eloise South prospect (Eugene Island 10) and completing our Nautilus well (Ship Shoal 263), which is expected to begin production by June 30, 2010 at a previously announced estimated rate of 20 million cubic feet equivalent per day, net to Contango.
The Company's onshore drilling program with its joint venture partner, Patara Oil & Gas, is currently producing at a rate of approximately 3.2 Mmcfed, net to Contango, from five wells. Three additional wells have been logged and are waiting to be fracture stimulated while another two wells are drilling ahead. To date we have invested approximately $12.7 million in this drilling program. Based on results to date, and using our current received gas price of $3.30 per thousand cubic feet equivalent, we are on target to earn our projected cash-on-cash pre-tax 15% rate of return.
Our current offshore production is approximately 81 Mmcfed, net to Contango. We have no debt, approximately $80.0 million in net cash and cash equivalents and $50 million of unused borrowing capacity.
Mr. Peak, the Company's Chairman and Chief Executive Officer, said, "Disappointment seems like too much of an understatement for one dry hole, let alone two. Stepping back though, we are one for three in this year’s exploration program with a fourth well drilling (Eloise South) and one more wildcat exploration well – our on-shore south Texas prospect -- planned prior to the end of this fiscal year, June 30, 2010."
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