Contango Spuds Dude, Eugene Island Prospects in GOM

Contango Oil & Gas has spud two exploration wells in the Gulf of Mexico. The Dude prospect (Matagorda Island 617) was spud in mid-February 2010 by the Hercules 253 jackup. In addition, we have taken a farm-in on block Eugene Island 10 to drill a well on our Eloise South prospect. This well was spud March 2, 2010 and will test the Rob L sands we see in our Eloise North well, and is being drilled in a location so that upon depletion of our Eloise South well, our well bore will be completed up-hole and produce in the Cib-op sand as our Dutch #5 well. The Company has a 100% working interest (72% net revenue interest) in Dude, a 29.7% working interest (19% net revenue interest) in Eloise South, and a 47.0% working interest (37.6% net revenue interest) in Dutch #5. Collectively, the Company has budgeted to invest a total, net to its interest, of approximately $25.0 million to drill both wells.

Completion operations on the Ship Shoal 263 discovery are proceeding and production from this well is expected to begin by mid-summer 2010 at an estimated rate of 20 million cubic feet equivalent per day ("Mmcfed"), net to Contango. To date, the Company has invested approximately $16.0 million in this well, and we expect to invest an additional $11.0 million to bring the well to production.

Kenneth R. Peak, Contango's Chairman and Chief Executive Officer, said, "We anticipate we will spud two more farm-in wells, one offshore and one on-shore, prior to June 30, 2010."


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