Lawyer Stuff The future is unknowable. We have good intentions but all of our projections and estimates will be wrong, and could be materially wrong. Wildcat exploration is expensive, speculative and potentially dangerous. An offshore…
Contangos Core Beliefs From Inception 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 industrys VALUE CREATION occurs through…
Contango is Low Cost But Apples to Oranges Problem Contango is among the lowest cost producers in the industry Fiscal Year Six Months Ended 6/30/11 Ended 12/31/11 Most independents use full cost accounting DD & A 1.68 1.56 Massive…
Contango Quarterly Sales Price and Pre Tax Margin 8.00 140.00 Average Sales Price (/Mcfe) 7.00 120.00 7.07 7.02 6.54 6.48 6.33 6.00 6.18 Pre-Tax Profit (/Mcfe) 5.98 100.00 R-(DDA+LOE*+G&A+INT) 5.85…
Calculation of Return on Capital Since Inception Our first priority is to always put the safety of our employees, partners and contractors first. Our second priority is to protect the environment where we work and live. Our third…
19,000,000 18,000,000 Negative Dilution Series E 17.8 MM 17,000,000 16.7 MM Series D Fully Diluted Shares Outstanding 16,000,000 Series C 15.4 MM 15,000,000 Preferred Series Capital Raised 14,000,000 2.6 MM Seed…
Contango Owners December 31, 2011 Institution Shares Held % S/O Cumulative % T. Rowe Price Associates, Inc. 1,343,990 8.75% 8.75% International Value Advisers, LLC 1,160,938 7.56% 16.31% Ariel Investments, LLC 1,019,171 6.64% 22.95%…
Contango Doesnt Have Lots of shares: 15.4 million outstanding Lots of options: none Lots of PUDs Lots of employees: 8 Lots of wells 12 offshore Lots of landowners - 2 Lots of regulators 4 Winners curse We were the sole bidder at…
Wildcat Exploration Budget through December 31, 2013 Estimated Future Net Costs Contango WI% Expected Well/Project Spud Date Ship Shoal 121/134 (Eagle) 25,000,000 100% May 1, 2012 South Timbalier 75 (Fang) 25,000,000 100% Q-3…
Why we like the Gulf of Mexico Stand Alone FY 2010 Finding and Development Costs, net to Contango: Costs Incurred Ship Shoal 263 45,625,293 (Including JEX Purchase) Vermilion 155 5,025,259 Matagorda Island 617 14,859,530 Write-off…
Look Back Economics - SS 263 Finding and Development Costs, net to Contango: Amount Invested 45,625,293 (including JEX purchase) Production commenced 6/28/2010 Reserves Produced through 12/31/11 (Bcfe) 6.9 Proved Developed…
Look Back Economics - VR 170 Finding and Development Costs, net to Contango: Amount Invested 26,382,052 Production commenced 9/13/2011 Reserves Produced through 12/31/11 (Bcfe) 1.8 Proved Developed Reserves in Place at 12/31/11…
In Investing its NOT HOW MANY but HOW MANY DO I OWN Since debt, P & A liabilities, and preferred stock are senior to common shareholders they reduce what shareholders own. Outstanding options also reduce per share 13 ownership…
Analyzing Contango as a TRIIG Problem Taxes By far our largest expense. We have been profitable because of our success with the exploration drill bit in the GOM and two very successful one-off investments. We are, however, at a…
Taxes - Our Biggest Expense We are profitable for both GAAP and IRS Accounting The Obama Administration would like to require IDCs to be capitalized and then amortized over some time frame life of property From Contangos perspective…
The times they are a changing Bob Dylan Slide courtesy of Strategas Research Partners 16
ENERGY AS A SILVER BULLET TO REBUILD AMERICAS MIDDLE CLASS, EVEN OUR BALANCE OF TRADE If Websters used pictures instead of wordsthis would define Slide courtesy of Strategas Research Partners Arbitrage and Opportunity 17
OUR DEFICITS WILL BE SOLVED EITHER BY OUR POLITICIANS OR THE BOND MARKET You can avoid reality but you cant avoid the consequences Slide courtesy of Strategas Research Partners of avoiding reality Ayn Rand 18
The Challenge Always be humble when making predictions especially about the future Never never never underestimate the transformative power of technology Creating value in a commodity with rising real costs and lower real prices…
Contango (any company) Investment Thesis PAST: Does the Company have retained earnings What is the companys return on capital since inception Contango 7.50X PRESENT: What does one fully diluted share own - net of all senior…
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