Contango Files Quarterly Results, Updates on Operations
Contango has reported revenues from sales of natural gas, oil and natural gas liquids for the three months ended December 31, 2008 of approximately $45.5 million, compared to $16.6 million for the same period last year. The Company reported net income from continuing operations for the three months ended December 31, 2008 of approximately $18.9 million, or $1.14 per basic share and $1.12 per diluted share. This compares to net income from continuing operations for the three months ended December 31, 2007 of $7.7 million or $0.45 per basic and diluted share.
For the six months ended December 31, 2008, the Company reported revenues from sales of natural gas, oil and natural gas liquids of approximately $118.2 million, compared to $25.7 million for the same period last year. The Company reported net income from continuing operations for the six months ended December 31, 2008 of approximately $49.8 million, or $2.98 per basic share and $2.92 per diluted share. This compares to net income from continuing operations for the six months ended December 31, 2007 of $12.9 million or $0.75 per basic and diluted share.
The Company is currently producing at an 8/8ths rate of approximately 228 million cubic feet equivalent per day ("Mmcfed") (approximately 85 Mmcfed net to Contango) as our Mary Rose #1 well is shut-in and undergoing a workover. Our production is further constrained due to entrained water that attaches to the paraffin in our condensate. This condition is exacerbated by ambient cold temperatures. We are in the process of installing line heaters at an 8/8ths cost of approximately $3.7 million ($1.85 million net to Contango), which we believe will solve this problem. We expect to have the line heaters installed in the March/April 2009 time frame.
Kenneth R. Peak, the Company's Chairman and Chief Executive Officer, said, "We are scheduled to spud our Eugene Island 56 prospect, High Country West, towards the end of this month. The Finding and Development cost estimate on this well, should it be successful, is anticipated to be in the $1.50/mcfe range. Contango has been, and expects to continue to be, a taxpayer, and thus we also have a tax related incentive to drill in what looks otherwise to be a difficult year for natural gas prices."
Mr. Peak continued, "When I began working in the industry in 1973, oil prices were $2.00 per barrel and natural gas was selling for $0.10/mcf, and since then, I have participated in all of the boom/bust cycles over the intervening years, and as painful as the busts are, they are also the time when the most and best opportunities develop. We intend to seek these opportunities throughout 2009. One of the best opportunities available to us is the purchase of our common stock. Thus far under our announced $100 million stock purchase program, we have purchased 717,654 shares of our common stock, at an average price of $46.88 per share, or a total expenditure of $33.6 million. Using our December 31, 2008 reserve report, we have thus "purchased" 15.4 Bcfe, at an average cost of $2.23 per Mcfe."
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