UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report March 3, 2003
CONTANGO OIL & GAS COMPANY
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 000-24971 95-4079863
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
3700 BUFFALO SPEEDWAY, SUITE 960
HOUSTON, TEXAS 77098
(Address of principal executive offices)
(713) 960-1901
(Registrant's telephone number,
including area code)
N/A
(Former name or former address, if changed since last report)
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
The following is a list of exhibits filed as part of this Form 8-K.
Where so indicated by footnote, exhibits, which were previously filed, are
incorporated by reference.
Exhibit No. Description of Document
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99.1 Press release dated March 3, 2003.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CONTANGO OIL & GAS COMPANY
Date: March 3, 2002 By: /s/ KENNETH R. PEAK
--------------------------------------------
Kenneth R. Peak
President and Chief Executive Officer
Date: March 3, 2002 By: /s/ LESIA BAUTINA
--------------------------------------------
Lesia Bautina
Controller
(Principal Accounting Officer)
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Exhibit 99.1
Contango Announces Exercise of Option on Freeport LNG Receiving
Terminal; Updates Operations and Hedging Status
HOUSTON--(BUSINESS WIRE)--March 3, 2003--Contango Oil & Gas
Company (AMEX:MCF) announced that is has exercised its option with
Cheniere Energy Inc. to acquire a 10% interest in Freeport LNG
Development LP, a limited partnership formed to develop an LNG
receiving terminal in Freeport, Texas. Contango will pay Cheniere a
total price of $2.33 million over time of which $750,000 has already
been invested.
Kenneth R. Peak, chairman and CEO of Contango, said, "The recent
unprecedented volatility in natural gas prices is indicative of a
market that in the short-term can only bring supply and demand into
balance by destroying demand. LNG imports will be an important
addition to solving our country's natural gas supply needs and the
Freeport site is ideally located in the heart of the largest natural
gas consuming market in the United States. We look forward to working
with Freeport Investments and Cheniere to help the Freeport LNG
facility become a reality.
"Our production is currently averaging 17,000 Mmbtu and 350
barrels of oil per day. We are drilling two prospects onshore south
Texas and one offshore prospect in the Gulf of Mexico. We have three
more onshore prospects and an additional offshore prospect, which we
expect to spud over the next several months. None of our crude oil
production is hedged and our current natural gas hedging positions are
as follows:
Term Call (1) Put (1)
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April-03 6,000/day $5.75 10,000/day $4.50
May - July 2003 8,000/day $5.34 10,000/day $4.50
Aug - Oct 2003 8,000/day $6.00 10,000/day $4.50
Nov - Dec 2003 NONE 10,000/day $4.00
(1) Quantities in Mmbtu and prices per Mmbtu
Kenneth R. Peak continued, "The NYMEX natural gas contract for
March 2003 jumped $2.53 per Mmbtu on Monday, Feb. 24, an unprecedented
38% increase in just one day. For the month of March we settled our
swaps, which were sold at $4.62/Mmbtu at a price of $8.90/Mmbtu, and
we settled our $6.00 calls at a price of $9.13/Mmbtu and as a result
incurred a $2.5 million hedging loss. We also reduced a portion of our
April through October hedges and incurred a $1.2 million hedging loss.
"Our net revenues for the production months of January and
February will be received in mid-March and mid-April, respectively,
and are expected to be $2.5-$3.0 million for each month. Our net
revenues for the production month of March, which we will receive in
mid-May, are expected to be $3.5 million. While I have long been a
proponent of hedging, and last year the Company benefited from $5
million of hedging gains, the recent hyper-volatility of natural gas
prices substantially changes the potential risk/reward of hedging for
a company like Contango and henceforth we will hedge only by
purchasing puts."
Contango is an independent natural gas and oil company that
explores for, develops, produces and sells natural gas and crude oil.
Contango's exploration and production efforts are currently focused
onshore on the Gulf Coast and offshore in the Gulf of Mexico.
This news release contains forward-looking statements within the
meaning of the Securities Litigation Reform Act. The statements
reflect the company's current views with respect to future events that
involve risks and uncertainties including uncertainties related to
successful negotiations with other parties, oil and gas exploration
risks, price volatility, production levels, closing of transactions,
capital availability, operational and other risks, uncertainties and
factors described from time to time in the company's publicly
available SEC reports. In light of these risks and uncertainties, the
forward-looking events described in this release might not occur.
CONTACT: Contango Oil & Gas Company, Houston
Kenneth R. Peak, 713/960-1901
kpeak@mcfx.biz
http://www.mcfx.biz