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 Nine Months Ended 6/30/11 Ended 3/31/12 Most independents use full cost accounting DD & A 1.68 1.55 Massive…
Contango Quarterly Sales Price and Pre Tax Margin R-(DDA+LOE*+G&A+INT) *LOE = (XPORT+SVCTX + W/O + INS + OPX) Rise in Liquids Prices Supporting Margins 4
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…
Negative Dilution *The shareholders that didnt sell now own 16.3% more of Contango than they did in June 2007 Average price under our 100 mm program is 46.35/share If Contango only had one share and I owned it that would…
Contango Owners March 31, 2012 Institution Shares Held % S/O Cumulative % T. Rowe Price Associates, Inc. 1,459,850 9.51% 9.51% Ariel Investments, LLC 1,431,082 9.32% 18.82% BlackRock Fund Advisors 931,070 6.06% 24.89% Vanguard Group,…
Contango Doesnt Have Lots of shares: 15.3 million outstanding Lots of options: none Lots of PUDs ( 2%) Lots of employees: 10 Lots of wells 12 offshore Lots of landowners - 2 Lots of regulators 4 Winners curse We were the sole…
Wildcat Exploration Budget through December 31, 2014 Contango WI% Well/Project Estimated Future Net Costs (subject to back-ins) Comments Ship Shoal 134 (Eagle) 25,000,000 100% Spud July 2012 South Timbalier 75 (Fang) 28,000,000…
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 25.00 Debt-Adjusted Mcfes per Fully Diluted Share 20.00 22.38 19.72 19.67 19.48 18.50 15.00 10.00 5.00 0.00 6/30/2008 6/30/2009 6/30/2010 6/30/2011…
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 Arbitrage and Opportunity 17 Slide courtesy of Strategas Research Partners
OUR DEFICITS WILL BE SOLVED EITHER BY OUR POLITICIANS OR THE BOND MARKET You can avoid reality but you cant avoid the consequences 18 Slide courtesy of Strategas Research Partners of avoiding reality Ayn Rand
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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