Contango Completes Purchase of Southern Delaware Basin Acreage and Closes on Equity Offering
Contango Oil & Gas Company (NYSE MKT: MCF) announced today that the
previously announced purchase of one-half of the seller’s interest in
approximately 12,100 gross undeveloped acres (~5,000 net acres to MCF)
in the Southern Delaware Basin of Texas closed on July 26, 2016. The
Company paid $10 million in cash at closing to fund the initial purchase
price, and will pay an additional $10 million in carried well costs over
the next 14 months and $5 million in additional contingent payments upon
success. Additionally, the Company closed on its recently announced
equity offering on July 27, 2016 and received approximately $46.9
million, net of fees and expenses.
Allan D. Keel, the Company’s President and Chief Executive Officer,
said, “I’m sure all Contango shareholders are as excited as we are to
have gained a foothold in one of the most prolific and economic plays in
the country. With funding this week from the recently announced equity
raise, we have already begun the process to secure a drilling rig to
commence drilling in September/October 2016, with initial production
expected in the fourth quarter of 2016. The initial plan is to start
development with one rig in 2016, and if results warrant, ramp up to two
rigs by mid-2017. Throughout this development project, we will continue
to focus on maintaining our strong balance sheet and financial
flexibility to remain well positioned to take advantage of any
additional acquisition opportunities that may arise.”
Contango Oil & Gas Company is a Houston, Texas-based, independent energy
company engaged in the acquisition, exploration, development,
exploitation and production of crude oil and natural gas offshore in the
shallow waters of the Gulf of Mexico and in the onshore Texas Gulf Coast
and Rocky Mountain regions of the United States. Additional information
is available on the Company's website at www.contango.com.
This press release contains forward-looking statements regarding
Contango that are intended to be covered by the safe harbor
"forward-looking statements" provided by the Private Securities
Litigation Reform Act of 1995, based on Contango’s current expectations
and includes statements regarding acquisitions and divestitures,
estimates of future production, future results of operations, quality
and nature of the asset base, the assumptions upon which estimates are
based and other expectations, beliefs, plans, objectives, assumptions,
strategies or statements about future events or performance (often, but
not always, using words such as "expects", “projects”, "anticipates",
"plans", "estimates", "potential", "possible", "probable", or "intends",
or stating that certain actions, events or results "may", "will",
"should", or "could" be taken, occur or be achieved). Statements
concerning oil and gas reserves also may be deemed to be forward-looking
statements in that they reflect estimates based on certain assumptions
that the resources involved can be economically exploited.
Forward-looking statements are based on current expectations, estimates
and projections that involve a number of risks and uncertainties, which
could cause actual results to differ materially from those, reflected in
the statements. These risks include, but are not limited to: the risks
of the oil and gas industry (for example, operational risks in exploring
for, developing and producing crude oil and natural gas; risks and
uncertainties involving geology of oil and gas deposits; the uncertainty
of reserve estimates; the uncertainty of estimates and projections
relating to future production, costs and expenses; potential delays or
changes in plans with respect to exploration or development projects or
capital expenditures; health, safety and environmental risks and risks
related to weather such as hurricanes and other natural disasters);
uncertainties as to the availability and cost of financing; fluctuations
in oil and gas prices; risks associated with derivative positions;
inability to realize expected value from acquisitions, inability of our
management team to execute its plans to meet its goals, shortages of
drilling equipment, oil field personnel and services, unavailability of
gathering systems, pipelines and processing facilities and the
possibility that government policies may change or governmental
approvals may be delayed or withheld. Additional information on these
and other factors which could affect Contango’s operations or financial
results are included in Contango’s other reports on file with the
Securities and Exchange Commission. Investors are cautioned that any
forward-looking statements are not guarantees of future performance and
actual results or developments may differ materially from the
projections in the forward-looking statements. Forward-looking
statements are based on the estimates and opinions of management at the
time the statements are made. Contango does not assume any obligation to
update forward-looking statements should circumstances or management's
estimates or opinions change. Initial production rates are subject to
decline over time and should not be regarded as reflective of sustained
production levels.
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