Contango Oil & Gas Company (NYSE Amex: MCF) (the “Company”) announced today that it will distribute the shares of its wholly-owned subsidiary, Contango ORE, Inc. (CORE) to the Company’s shareholders in December following registration with the SEC. CORE has been formed to explore for gold and rare earth minerals in the State of Alaska. The Company currently controls over 750,000 acres in Alaska.

One share of CORE will be distributed for each 10 shares of the Company. No fractional shares will be issued, but a cash payment will be made to shareholders of the Company with less than 10 shares based upon the value established for CORE immediately before the distribution. The record date for shareholders for the distribution is October 15. The Company anticipates that the shares of CORE will trade on the OTCBB after the distribution.

Kenneth R. Peak, the Company’s and CORE’s Chairman and Chief Executive Officer, said, “We believe it is important to separate our highly speculative mineral exploration efforts in Alaska from our natural gas and oil business. I can best explain our gold exploration effort using oil and gas exploration parlance. In oil and gas exploration, we progress from the ‘idea’ stage to the ‘lead’ stage to hopefully a drillable ‘prospect’ and then we drill the well with the result being either a ‘dry hole’ or a ‘discovery.’ We are still in the ‘idea’ stage in our gold exploration effort.

“In our gold exploration effort we have run ground geophysical surveys with induced polarization (IP) which measures the conductivity/resistivity of underlying sub-surface rocks. Conductivity indicates the presence of metals – which are, of course, the hoped for result. Based on our geology and IP results, we are reviewing our options for our 2011 exploration program. Our current plan is to fly airborne magnetic, electromagnetic, and radiometrics early next summer (the E&P equivalent to ‘seismic’) to help us decide if we have a “prospect” worthy of initial exploration drilling.

“Our Rare Earth Elements (REE) exploration program is at the very early ‘idea’ stage. Our strategic concept is that REE’s will become increasingly valuable as the world moves to embrace “green energy” in the form of wind power and electric/hybrid automobiles all of which, together with a number of critical military applications, require REE’s. In furtherance of our strategy, we have staked claims in Alaska that may be prospective for REE’s. We will spend this winter developing our plans on how best to proceed with a low cost exploration program.

“A cautionary note. The probability of success for the commercialization of our gold and REE exploration properties, should we even develop a prospect, is quite low. We intend to run a bare-bones G&A effort and seek to learn of failure, should that be our outcome, cheaper and sooner rather than more expensive and later.”

Contango is a Houston-based, independent natural gas and oil company. The Company’s core business is to explore, develop, produce and acquire natural gas and oil properties primarily offshore in the Gulf of Mexico. Additional information can be found on our web page at

This press release contains forward-looking statements regarding Contango that are intended to be covered by the safe harbor "forward-looking statements" provided by 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 "expects", “projects”, "anticipates", "plans", "estimates", "potential", "possible", "probable", or "intends", or stating that certain actions, events or results "may", "will", "should", or "could" 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; 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 management's estimates or opinions change.

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