CONTANGO OIL AND GAS COMPANY PROVIDES AN OPERATIONAL UPDATE

HOUSTON, March 12, 2020 (GLOBE NEWSWIRE) -- Contango Oil & Gas Company (NYSE American: MCF) (“Contango” or the “Company”), as a result of the decline in commodity prices in the last several days, and especially oil prices, today provides a brief update on its response to that decline.

The Company has consistently been diligent in protecting the vast majority of expected cash flow from such commodity price declines, as evidenced by the fact that it currently has hedges in place for 71% and 67% of currently forecasted hedgeable PDP oil production for 2020 and 2021, respectively, at average floor prices of $55.13 and $51.71 per barrel, respectively.  The Company also has 72% and 54% of currently forecasted hedgeable PDP natural gas production for 2020 and 2021, respectively, hedged at average floor prices of $2.57 and $2.51 per Mcf.  Approximately 98% of the Company’s hedges are swaps, and the Company has no three way collars or short puts. The “hedgeable PDP” does not include Gulf of Mexico production that the Company’s credit agreement precludes it from hedging during peak hurricane season (i.e., August through October), which is only one percent of current daily oil production. The Company currently forecasts product mix for 2020 production as approximately 47% natural gas, 27% oil and 26% natural gas liquids.   

The Company is currently undertaking an extensive review of all of its producing areas to determine the economic or operational justification for continuing to produce unhedged barrels in this price environment, and where determined not justified, and operationally feasible, evaluate potentially shutting in or curtailing production.  The Company is also reevaluating the economic justification in this price environment for proceeding with the production-enhancing workover program originally scheduled for the first half of 2020. The limited onshore development drilling the Company had planned for 2020 is also being reevaluated.  Because of the Company’s low debt profile and borrowing cost of capital, the Company believes it is in the fortunate position of being able to temporarily shut in or curtail higher cost production when there is a decline in the commodity markets.