Contango, Crimson Exploration Pen Merger Agreement

Contango Oil & Gas Company and Crimson Exploration Inc. jointly announced Wednesday that they have signed a merger agreement for an all-stock transaction pursuant to which Crimson would become a wholly owned subsidiary of Contango. Upon consummation of the merger, each share of Crimson stock will be converted into 0.08288 shares of Contango stock resulting in Crimson stockholders owning 20.3 percent of the post-merger Contango.

Following the merger, the combined company will be a premier Houston-based independent oil and gas company with a balanced offshore Gulf of Mexico (GOM) and onshore Texas production profile and a deep inventory of high-impact GOM prospects complemented by Crimson's onshore oil and natural gas liquids-focused, lower-risk unconventional resource positions in several prolific plays. Pro forma for the merger, Contango's net daily production for the quarter ending March 31, 2013 would be approximately 101 Mmcfe (31 percent oil and natural gas liquids) and the proforma combined company's total proved reserves are estimated to be approximately 312 Bcfe (31 percent oil and natural gas liquids), based on SEC pricing at March 31, 2013. Pro forma PV-10 of the estimated proved reserves of the combined company would be approximately $932.5 million. The enhanced size and scale of the combined company and its conservatively capitalized balance sheet will position it to implement an accelerated oil and natural gas liquids-focused drilling program. This transaction is expected to be immediately accretive to cash flow per share for Contango.

Joseph Romano, President, Chief Executive Officer and Chairman of Contango said, "We are excited about the complementary nature of this combination and the numerous benefits make it a win-win for the stockholders of each company. We also are very pleased to welcome Allan Keel and his Crimson team to Contango. We all see a great opportunity to accelerate and optimize the development of Crimson's significant resource potential in parallel with continuing Contango's GOM exploration focus. Contango will look to optimize capital allocation across the combined portfolio and we currently expect to continue to drill two to four exploration prospects per year in the GOM while operating two to four onshore rigs focused on unconventional resource development. This transaction is consistent with Contango's strategy of increasing stockholder value through the drill-bit and it helps us achieve a number of our long-term strategic objectives."

Allan D. Keel, Crimson's president and chief executive officer said, "We look forward to joining Contango and assuming responsibility for a portfolio of top tier offshore assets and combine them with Crimson's extensive inventory of onshore opportunities. The combination with Contango provides substantial offshore cash flow generation that can be used to accelerate our drilling program in our oil and natural gas liquids-rich acreage targeting the Woodbine, Buda, Eagle Ford, James Lime and Liberty County prospects. This accelerated development should result in meaningful reserve, production and cash flow growth for the combined company. Furthermore, the merger will allow Crimson to de-lever our balance sheet and increase our trading float. We believe this merger is a great combination of two complimentary companies and a great opportunity to unlock value more quickly for Crimson's stockholders."


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