Contango Oil & Gas Company (NYSE MKT: MCF) announced today that the Company’s Vermilion 170 well has resumed production and as of June 12, 2013, was producing approximately 9.7 million cubic feet equivalent per day (“Mmcfed”), net to Contango. This well had been shut-in since late January 2013 for workover operations, which were recently successfully completed. The Company’s total offshore production is now approximately 66.9 Mmcfed. Additionally, the Company has signed a contract to secure the Hercules 202 drilling rig to spud our South Timbalier 17 oil prospect in July 2013, at an estimated dry hole cost of $6.5 million, net to Contango. This prospect, located in State of Louisiana waters, was obtained from a third-party independent oil and gas company. Under the terms of the participation agreement, Contango will have a 75% working interest in this well. Joseph J. Romano, the Company’s Chairman and Chief Executive Officer, said, “I am quite pleased to have the workover at Vermilion 170 behind us, and to begin drilling our first exploration well of the year at South Timbalier 17 in the next few weeks. Additionally, we are negotiating to secure a second drilling rig, the Spartan 202, to drill Ship Shoal 255, as soon as permitting is complete. We have budgeted a dry hole cost of approximately $22.5 million and expect to drill this well in late-2013.” In addition to these two prospects, the Company previously announced that it was the apparent high bidder on three lease blocks from the Central Gulf of Mexico Lease Sale 227 held on March 20, 2013. The Company has now been awarded these three leases, representing two more prospects. The Company has paid the remainder of the $1.7 million bid on Eugene Island 23, Ship Shoal 52 and Ship Shoal 59. Our plan is to promptly begin the permit process to drill these new prospects in the second and third quarter of calendar 2014.
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.