2008-10-21-2008-04-08-2008-04-08

Purchased additional 4.17% WI in GOM Eugene Island 10 Dutch discovery, 4.56% in 5 Mary Rose leases, gaining 21 Bcfe proved.

Contango Oil & Gas Co., Houston, (AMEX: MCF) has acquired additional working interest in the Dutch and Mary Rose discoveries in the Gulf of Mexico from undisclosed sellers for a total of $100 million in two transactions. Contango is additionally seeking proposals for the possible sale of the Dutch and Mary Rose discoveries. The acquisitions include an additional 4.17% working interest and 3.33% net revenue interest in the Eugene Island 10 Dutch discovery and an additional average 4.56% working interest and approximately 3.33% net revenue interest in the five Louisiana Mary Rose leases. The estimated proved reserves purchased are 21 billion cubic feet equivalent (24 billion proved plus probable). The purchase increases Contango's working interest in Dutch to 47.05% (38.12% net revenue interest) and increases its average working interest in Mary Rose to 53.21% (39% average net revenue interest). Estimated proved reserves in each discovery are now 254 billion cubic feet equivalent (280 billion proved plus probable). The effective date is Jan. 1, 2008. Contango chairman and chief executive Kenneth R. Peak says the company is drilling Mary Rose #2 well and expects to be at logging point by late April to mid-May. A second rig has arrived and spudded Mary Rose #4. Contango will drill a wildcat exploration well called Eloise to a deeper horizon on the Mary Rose acreage. "We are currently on schedule to begin producing at our Mary Rose #1 and Mary Rose #3 wells before the end of May." Additionally, Contango has retained Merrill Lynch & Co. to obtain proposals for the sale of the Dutch and Mary Rose discoveries. Peak says, "If Contango obtains an acceptable proposal to acquire its Dutch and Mary Rose discoveries, we would likely structure the disposition through the sale of Contango by its shareholders with the simultaneous spin-off of the remaining Contango assets to our shareholders in a new company, Contango Energy Co. This structure would allow Contango shareholders to have an interest in any future exploration efforts at our other Gulf of Mexico leases."