Contango

Oil & Gas Company

 Lawyer Stuff
This presentation contains forward‐looking statements regarding Contango that 
are intended to be covered by the safe harbor ʺforward‐looking statementsʺ 
provided by of 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 ʺexpectsʺ, “projects”, ʺanticipatesʺ, ʺplansʺ, ʺestimatesʺ, ʺpotentialʺ, 
ʺpossibleʺ, ʺprobableʺ, or ʺintendsʺ, or stating that certain actions, events or results 
ʺmayʺ, ʺwillʺ, ʺshouldʺ, or ʺcouldʺ 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; 
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 ….More Lawyer Stuff
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 managementʹs estimates or opinions change. 

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…. And More Lawyer Stuff
“There are three reasons why lawyers are replacing
rats as laboratory research animals. One is that they’re
plentiful, another is that lab assistants don’t get
attached to them, and the third is that there are some
things rats just won’t do”
-Unknown

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CONTANGO – a natural gas centric,
non crude oil oriented – never to be
confused with anything remotely related to
manufacturing - company with a business
model focused on drilling wildcat exploration
wells with a minimum of debt and
shareholder dilution

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 Contango’s 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 industry’s VALUE 
CREATION occurs through the drilling of successful exploration 
wells

„ The whole point of a business is only and always to increase 
SHAREHOLDER WEALTH…with conditions

“Beliefs are optional, Results are mandatory and the only result that
matters is total return to shareholders”
-Kenneth R. Peak
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Lowest Cost

CONTANGO
Three Months Ended 3/31/10
DD & A $1.24
LOE $0.66
G&A $0.22
Interest $0.02
TOTAL $2.14 / Mcfe
Vs
42 Company Average
$5.74 / Mcfe

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 Value Creation
PER SHARE PER MCFE PRODUCED PER EMPLOYEE
Revenue $9.64 Revenue $5.20 Revenue $19,476,677

LOE $1.25 LOE $0.68 LOE $2,530,620

G&A $0.49 G&A $0.26 G&A $981,648
Interest $0.04 Interest $0.02 Interest $71,439
Cash Costs $1.78 Cash Costs $0.96 Cash Costs $3,583,707

DD & A $2.21 DD & A $1.19 DD & A $4,461,035

Operating Profit $5.65 Operating Profit $3.05 Operating Profit $11,431,935

EBITDAX $7.88 EBITDAX $4.25 EBITDAX $15,912,234

Market Cap $103,324,375

Debt $0.00 Debt $0.00 Debt $0.00
Production (Mcfe) 1.85 Production (Mcfe) 3.7 Bcfe
Reserves (Mcfe)* 19.15 Reserves* 38.7 Bcfe
Book Value $23.69 Book Value $47,800,000
For the 12 months ended 3/31/10
* Based on June 1, 2010 Reserve Report

“Measure 9 times, cut once” Tevye – Fiddler on the Roof

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 Maximize Shareholder
Wealth….With Conditions
„ 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 priority is maximize “Shareholder earnings” which we define as retained earnings plus 
dividends. We are dilution and debt phobic. 

„ Peak Ratio Defined:   Shareholder Earnings =   R/E + Dividends

Net Invested Capital          Equity – (R/E + Dividends + Share Repurchases)

„ Contango’s Peak Ratio 
Calculated as at 3/31/10: R/E + Dividends =        $365.2 + 5.4 =           $370.6 =   30.4X  
Equity – (R/E + Dividends)  $443.1‐(365.2 + 5.4+60.3)       $12.2

“Past performance is no guarantee of future results – but it is the way to bet”

- Kenneth R. Peak
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 Negative Dilution
19,000,000

Series E
17.8 MM
18,000,000

17,000,000
16.7 MM Series D
Fully Diluted Shares Outstanding

16,000,000
15.97 MM
Series C

15,000,000

Preferred Series Capital Raised

14,000,000
2.6 MM Seed Capital $5.0 Million
Share Repurchase Series A $2.5 Million
(SUIT)
Series B $5.0 Million
Series C $8.0 Million
13,000,000
Series D $10.0 Million
Series E $30.0 Million
Total $60.5 Million
12,000,000

Shares Purchased Amount

4,453,730 $89.0 Million
11,000,000

Average price paid is $19.98 / share

10,000,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

“They say you can’t do it, but sometimes it doesn’t always work”
-Casey Stengal 9
 Contango’s Owners
June 30, 2010
Holder Shares Held % S/O Cumulative %
1 TCW Asset Management Company 915,718 5.84% 5.84%
2 BlackRock Institutional Trust Company, N.A. 872,916 5.57% 11.40%
3 Sellers Capital Master Fund, Ltd. 761,821 4.86% 16.26%
4 Keeley Asset Management Corp. 683,600 4.36% 20.62%
5 Vanguard Group, Inc. 558,799 3.56% 24.18%
6 Dreman Value Management, L.L.C. 548,065 3.49% 27.68%
7 Morgan Stanley Investment Management Inc. (US) 528,783 3.37% 31.05%
8 Deutsche Investment Management Americas, Inc. 413,825 2.64% 33.69%
9 Palo Alto Investors, LLC 310,000 1.98% 35.66%
10 State Street Global Advisors (US) 277,822 1.77% 37.43%
11 California Public Employees' Retirement System 218,421 1.39% 38.83%
12 Seizert Capital Partners, L.L.C. 214,095 1.36% 40.19%
13 Dimensional Fund Advisors, LP 212,228 1.35% 41.54%
14 TIAA-CREF 204,637 1.30% 42.85%
15 Southpoint Capital Advisors, L.P. 200,000 1.28% 44.12%
16 Northern Trust Investments, N.A. 176,641 1.13% 45.25%
17 PNC Wealth Management 158,344 1.01% 46.26%
18 Brenner West Capital Advisors, LLC 150,210 0.96% 47.22%
19 Horan Capital Management, LLC 134,537 0.86% 48.08%
20 AQR Capital Management, LLC 120,268 0.77% 48.84%
21 Harbert Management Corporation 120,000 0.77% 49.61%
22 JPMorgan Private Bank (United States) 117,113 0.75% 50.35%
23 Bonanza Capital, Ltd. 104,176 0.66% 51.02%
Other (17) Institutions and Advisors 1,102,473 7.03% 58.05%
Contango Management and BOD 3,214,855 20.50% 78.54%
Source: Reuters

“Writing a check separates a commitment from a conversation”

- Warren Buffet 10
 We Don’t Have

„ Lots of shares O/S

„ Lots of shareholders
„ Lots of options O/S
„ Lots of paid in capital vs R/E (SEE “PEAK RATIO”)
„ Lots of PUD’s
„ Lots of employees
„ Lots of wells
„ Lots of landowners
„ Lots of regulators
„ Near term leases expiring
„ L-T rig contracts
„ Debt
„ Severance taxes (in Federal offshore)
„ Hedges

“Sometimes what you don’t have is more important than what you do have”
-Kenneth R. Peak 11
 GOM In Chaos
„ Independents are waiting to see what new regs, bonding requirements are in store for us

„ Regulations/bonding requirements so onerous as to discourage Independents from shallow water drilling (less
than 500 feet) – very unlikely in my opinion

„ Increased safety procedures, safer fail safe’s, more rigorous / lengthy permitting etc. – very likely but I believe we
can manage through these

„ We are and have always been 100% responsible to clean-up any spill

„ Unlimited “Economic Damages” for spills – few Independents would be willing – or able - to take the risk of dealing
with the plaintiffs bar

„ The talk about criminalizing errors in judgment, or equipment failures – reflects how out of touch with the real world
Washington is

„ There are too many jobs at risk in an already devastated region, too much in tax and royalty revenues, too many
votes and too much production to just shut the GOM down. Plus Congress would be loathe to be seen helping
majors at the expense of the Independents

„ Two exploration permits have been approved – but in no sense is it business as usual

„ We will be aggressive. We just hired an outstanding Drilling Engineer to augment our efforts

„ Projected percentage of GOM rigs stacked at end of October = 80%

“I’m from the government and I’m here to help”

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- Anon
 Capex Plans
„ 4 Wildcat GOM wells at $15 million each

„ 15 Conterra J/V wells at $1.5 million per well

„ Total Capex of about $85 million before any success capex

„ Cash on hand $40 million

„ Current monthly pre-tax cash flow about $15 million

„ Spud first GOM well offshore Texas (permit in hand) – Mid October
Why Does Contango STILL like the GOM?
Economics

„ Acreage, G & G and seismic costs last 4 years combined: $17 million
„ NRI to Contango AFTER landowner ORRI and 
AFTER G & G Promote: 70‐72%
„ Severance Tax(1): 0%
„ Ad Valorem Tax(1): 0%
„ Sales & Use Tax(1): 0%
„ State Income Tax(1): 0%
„ LOE(2) $.53
„ G&A(2) $.21
„ If NAT GAS @ $4.42/Mcf – Contango Receives(2) $5.68/Mcfe
„ If Contango produces 58.4 Mmcfd – Contango Sells (2) 77.1 Mmcfed
„ Contango is a Taxpayer: We have no NOL Carry Forwards 35% Risk Partner
Intangibles

„ Rig costs are less than half of 2 year ago levels
„ One Landowner – MMS(1)
„ Lot’s of nearby infrastructure
„ No Nimby’s to deal with
„ Yes, we will drill dry holes – The E in E&P stands for Exploration
„ Yes, our permitting and bonding costs are going up, but we will find a way

(1) Federal Waters
(2) Average for 9 months ended March 31, 2010

“The consensus opinion always sounds logical, is easily understood and is frequently
wrong”
- Kenneth R. Peak

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“If this is right – I believe we will make a bunch of money”
- Kenneth R. Peak 15
 In Conclusion………..
ƒ Who has positive retained earnings?
ƒ Who has lower DD & A? 
ƒ Who has lower LOE?  
ƒ Who has lower debt?
ƒ Who has lower G & A? 
ƒ Who has more PDP Mcfe’s/Share?
ƒ Who has more exploration upside per share?
ƒ Who has more commodity price upside?
ƒ Who doesn’t have an NOL carry‐forward? i.e. a 35% exploration 
partner?
ƒ Who has fewer shares today than 1,3,5,7,9 years ago?
ƒ Which CEO’s haven’t taken options or restricted stock the last 3 
years? Incentives drive behavior. 

“The further backward you look, the further forward you can see”
- Winston Churchill 16
The Upbeat Case for Natural Gas

“The best cure for low prices is low prices”

The Upbeat Case for Natural Gas

„ Prices are set by the cost of the “Marginal” Mcf

„ Average cash cost is $3.00/Mcf – absolute floor
„ Average production cost is $5.15/Mcf
„ The Marginal Mcf is a Canadian Mcf at $6.00/Mcf
„ Query: How long will the Canadians subsidize U.S. Natural Gas prices?
„ Answer: Longer than you think
 The Upbeat Case for Natural Gas

„ Canadian imports are down 13% in the last 2 years

„ Gas prices are higher in Europe & Asia – thus U.S is the market of last resort for LNG
„ Econ 101 works again
The Upbeat Case for Natural Gas
Gulf of Mexico represents 12% of US natural gas production

Production from the GOM shelf has been in steady decline since
2001… now the deep shelf can only be going down.
The Upbeat Case for Natural Gas
Increased Costs, Higher Gas Prices
Ahead?
Utilization levels for our equipment have now surpassed those at
the rig count peak in Q3 2008, and are fast approaching levels
not seen since the fall of 2006.
-- Halliburton

In U.S. land, activity is likely to flatten out. We don’t expect the

market to provide significant volume gains for a – H2 ’10, but we
don’t expect any weakness either. High performers will be
artificial lift, stimulation, directional, and completion. Pricing
trends will be selectively constructive.
-- Weatherford

Interest in liquids rich gas plays remain high because of the

relative stability of oil prices and improved operator returns on
these resources. These plays account for 10 to 15% of total rig
count. And while they are typically counted as gas rigs, they are
dependent economically on commodity prices for liquids.
-- Halliburton
The Upbeat Case for Natural Gas

If Halliburton is right – and who would have better information –

about 10-15% of rigs classified as “gas rigs” are drilling for liquids plays
 The Problem with the Upbeat Case
for Natural Gas

„ This is the “Paladin Syndrome” – “have money will drill”

„ For Credit Suisse 57 company survey, Capex to cash flow now running 152% for 2010 and 136%
for 2011.
„ Don’t forget Stein’s Law: “That which can’t continue – Won’t”
America’s Energy Company

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