Contango Oil & Gas Company (NYSE MKT: MCF) reported net income for the quarter ended December 31, 2012 of approximately $2.6 million, or $.17 per basic and diluted share, compared to net income for the same period last year of approximately $19.5 million, or $1.27 per basic and diluted share.
Joseph J. Romano, the Company’s President and Chief Executive Officer, said, “Our earnings this quarter are still being impacted by the two dry holes at Eagle and Fang we drilled the preceding quarter. We incurred $6.3 million in exploration expenses for the quarter related to these two wells, along with $5.7 million of impairment charges related to writing down our reserves at Ship Shoal 263. Lower sales prices as well as production downtime for maintenance also contributed to the decrease in earnings. We received $5.23/Mcfe for the quarter ended December 31, 2012 as compared to $6.18/Mcfe for the quarter ended December 31, 2011.
“Our significant Dutch and Mary Rose fields continue to produce consistent with our forecast. The Company’s balance sheet continues to be very strong. We have no debt, $100 million of working capital, and $7.0 million per month of anticipated cash flow available for exploration. We are presently looking to balance our inventory of offshore prospects with the opportunity to participate further in predictable, high quality, onshore resource plays. We plan to drill our next offshore well in mid-2013 when permits on our Ship Shoal 255 prospect are anticipated to be approved.”
Our offshore reserves as of December 31, 2012 were approximately 221.1 billion cubic feet equivalent (“Bcfe”). These reserves are approximately 27.0 Bcfe less than our proved reserves as of September 30, 2012. The major contributors to this decrease include normal production of 6.7 Bcfe during the quarter, a 5.1 Bcfe decrease in our Ship Shoal 263 reserves estimates, and a 14.0 Bcfe decrease in our Vermilion 170 reserves estimates, as determined by our reservoir engineer.