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Contango Oil & Gas Company

Contango Oil & Gas Company. Forward Looking Information.

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Contango Oil & Gas Company

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  1. Contango Oil & Gas Company

  2. Forward Looking Information The following presentation contains “forward-looking statements” and is made pursuant to the “safe harbor” provision of the Private Securities Litigation Reform Act of 1995. Oil and gas activities are subject to risks and uncertainties inherent in the exploration, development, operation and marketing of oil and natural gas. These risks include, but are not limited to, volatility of products, prices, uncertainties in reserve estimates, drilling risks, operations and production risks and environmental issues. Results could vary materially from the forward-looking information. You are cautioned that such forward-looking statements should be read in conjunction with the available company information, including the most recent Form 10-K and Form 10-Q.

  3. Probable Reserves The SEC permits oil and gas companies to disclose in their filings with the SEC only "proved" reserves, which are reserve estimates that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Contango uses in this press release the term "probable" reserves, which SEC guidelines prohibit from being included in filings with the SEC. Probable reserves are unproved reserves which are more likely than not to be recoverable. Estimates of probable reserves which may potentially be recoverable through additional drilling or recovery techniques are by their nature more uncertain than estimates of proved reserves and accordingly are subject to substantially greater risk of not actually being realized by the Company.

  4. The Big Picture • Annual Natural Gas Depletion – 35% and increasing • Record number of wells drilled – but flat production • No nukes/increasing constraints on coal – (viz TXU) • National Nimbyitis – less LNG / less Drilling / less supply • Ethanol – Growing natural gas consumer – 1% of consumption? • Canada - $4.50 Mcfe F&D costs more than 2X in 5 years • New Mexico – Canary in the Rockies • Hurricanes • An ever growing world economy • LEAST but not LAST: You got to love Al Gore • LAST but not LEAST: • Query: Why has the rig count continued to surprise on the low side? • Answer: F&D costs are higher than the industry can afford. i.e. $6 gas is not high enough?

  5. The Contango Story • Started Fall 1999 • Since inception $30 million net capital raised • At April 10/ $6 million of cash/ $35million of debt/ $15 million of borrowing availability. • At December 31, 2006 $121.5 million SEC PV-10 • Six employees • 15.9 million shares outstanding/16.9 million shares fully diluted - compared to 11.5 and 16.7 million shares at June 30, 2001. • 30 shareholders own 75% of stock • 24% owned/ controlled by Board of Directors and Officers

  6. Contango’s Drivers • The only competitive advantage in the natural gas and oil business is to be among the lowest cost producers • Virtually all the exploration and production industry’s value creation occurs through the drilling of successful exploratory wells • Maximize value creation- PER SHARE

  7. MCF IS FOR NATURAL GAS BULLS ONLY • LNG • Fayetteville Shale • Deep Shelf GOM Exploration • R/P’s 50 Years/25 Years/ 2.5 Years • No Hedges- Full commodity price exposure- DOWN and up

  8. LNG • Long term annuity • Start-up Q-1 2008 – First grassroots plant in 30 years • Funding in place for Phase I and “mini” Phase II • Plant cost- $830 million • MLP - Able

  9. Fayetteville Shale • 44,000 net Fayetteville Shale mineral acres to Alta Group (31,000 Net BPO to MCF) • Still EARLY in learning curve, but • Access to technology is now a commodity • Precision horizontal drilling with longer legs • Multiple well stimulation techniques • 7 wells drilled-Lessons Learned • Rig • Supervision • Learning curve • Contango to become deeply involved in operations • Move North • Current Operations - 5 well rig contract plus 2 outside operated

  10. Highlight of Fayetteville Shale Activity

  11. Gulf of Mexico • 72 GOM blocks • 4300 blocks 3-D seismic • Dutch & Mary Rose • Proved 158 Bcfe (46 Bcfe net to Contango) • Probable 266 Bcfe (77 Bcfe net to Contango) • A lot of folks are leaving the “Dead Sea” • Contango’s constraints are capital and people – not ideas

  12. Contango Alternative Energy

  13. America’s Energy Company MCF IS NATURAL GAS

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