Contango Oil & Gas Company (NYSE MKT: MCF) announced today that it has reached total depth on its Ship Shoal 134 prospect (Eagle) and no commercial hydrocarbons were found. The Company will proceed to plug and abandon the well. The Company expects to incur approximately $29.5 million to drill, plug and abandon this well, including leasehold costs. We continue to drill ahead with our South Timbalier 75 prospect (Fang). We are running a drilling liner and expect to reach total depth by late-November 2012. Brad Juneau, the Company’s President and Acting Chief Executive Officer, said, “While we are certainly disappointed with the results of Eagle, we fully intend to continue drilling our inventory of offshore prospects, which has been the foundation of our growth over the past several years. We have sufficient cash on hand and expected revenues from operations to drill our offshore acreage inventory during its primary term. After subtracting G&A costs and lease operating expenses, our net monthly revenues are approximately $7.5 million per month, net to the Company.” Mr. Juneau continued, “The Company has a portfolio of five additional prospects plus two leases not yet awarded from the last lease sale in June 2012. From a timing perspective, we expect to begin drilling our remaining existing inventory in mid-2013, as permits are approved.” Updating our onshore operations, in October 2012, the Company purchased approximately 336 acres in the Tuscaloosa Marine Shale (“TMS”) from Goodrich Petroleum Company LLC (“Goodrich”) and ratified an operating agreement to become a 25% non-operating working interest partner. We have invested approximately $4.3 million, net to Contango, to acquire acreage and drill our first horizontal well with Goodrich, the Crosby 12H-1. For evaluation purposes, we will drill a pilot hole, perform an open-hole evaluation and obtain a conventional core over the TMS interval. The data we obtain from this well will help us evaluate our TMS acreage and develop a plan for drilling and operating future wells. As of October 19, 2012, we have invested approximately $8.8 million to lease approximately 24,000 acres in the TMS.
In trading on Monday, shares of Contango Oil & Gas Co. crossed below their last reported book value — defined as common shareholder equity per share — of $30.68, changing hands as low as $30.63 per share.