HOUSTON, June 05, 2020 (GLOBE NEWSWIRE) — Contango Oil & Gas Company (NYSE American: MCF) (“Contango” or the “Company”) announced that it will offer a cost-effective “fee for service” property management option to companies with distressed or stranded assets, or companies with a desire to reduce administrative costs, while providing Contango a new avenue for growth that aligns with the Company’s own business strategy. Contango also announced today that it has entered into a Management Services Agreement with Mid-Con Energy Partners, LP (“Mid-Con”) to provide operational services as operator of record on Mid-Con’s oil and gas properties.
Under the Management Services Agreement, Contango will take over the operations of Mid-Con’s oil and gas assets in exchange for a services fee ($4 million per year) plus reimbursement of certain costs and expenses, an annual deferred fee component ($2 million per year), and warrants to purchase common units in Mid-Con at $4.00 per unit. Contango anticipates hiring several key employees from Mid-Con’s technical team to expand Contango’s expertise with enhanced oil recovery operations and enhance the Company’s fee for service capability for other similar fee for service opportunities.Wilkie S. Colyer, the Company’s President and Chief Executive Officer stated, “During our last earnings call, we talked about being creative and adapting our offensive strategy given the current oil price environment, and this is a great example of our approach. We are excited to announce this transaction with Mid-Con Energy Partners, LP and feel this is a win-win for both parties. The transaction benefits Contango in that we can generate asset light revenue/cash flow while also aligning our interests with those of Mid-Con via warrants to participate in value creation at Mid-Con. Mid-Con also benefits by leveraging our existing platform to significantly lower its cost structure and freeing up capital to pay down debt during this period of depressed commodity prices. We continue to see our distressed asset business as a solution to non-natural owners of oil and gas assets, and we feel this is a great example of the kind of transaction needed in today’s environment. As an industry, G&A is still too high, and consolidation of sub-scale businesses is the best path forward to position those assets for a recovery.”W. Farley Dakan, the Company’s Senior Vice President of Corporate Development added, “We are excited to announce this transaction with Mid-Con Energy Partners LP as it highlights Contango’s ability to manage oil and gas assets efficiently via a fee for service arrangement and aid in, and participate in, the value recovery of the assets. Contango, and more specifically our management team, has the unique ability to deal with complex situations that require immediate strategic, tactical, operational and financial direction. In my previous role with Will Energy Corp, we were successful in developing a unique way to manage assets via a similar structure. With Contango, we are leveraging our extensive relationships to grow during this downcycle. Billions of dollars of oil and gas assets are economically owned by banks in a no-bid A&D environment and Contango is one of the few platforms focused on a comprehensive solution.”Haynes and Boone, LLP is representing Contango in this transaction.About Contango Oil & Gas CompanyContango Oil & Gas Company is a Houston, Texas based, independent oil and natural gas company whose business is to maximize production and cash flow from its offshore properties in the shallow waters of the Gulf of Mexico and onshore properties in Texas, Oklahoma, Louisiana and Wyoming and, when determined appropriate, to use that cash flow to explore, develop, exploit, and increase production from its existing properties, to acquire additional PDP-heavy crude oil and natural gas properties or to pay down debt. Additional information is available on the Company’s website at http://contango.com. Information on our website is not part of this release.Forward-Looking Statements and Cautionary StatementsThis press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based on Contango’s current expectations and include statements regarding the benefits of the agreement with Mid-Con Energy Partners, LP and the addition of a property management service offering to our corporate strategy, our ability to take advantage of perceived opportunities in the marketplace, value creation, our liquidity, potential acquisitions, our ability to execute on the corporate strategy, our ability to hire employees who will contribute to our strategy, our ability to grow, and other expectations, beliefs, plans, objectives, assumptions, strategies or statements about future events or performance. Words and phrases used to identify our forward-looking statements include terms such as “guidance”, “expects”, “projects”, “anticipates”, “believes”, “plans”, “estimates”, “potential”, “possible”, “probable”, or “intends”, “goal” or words and phrases stating that certain actions, events or results “may”, “will”, “should”, or “could” be taken, occur or be achieved. 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; our ability to comply with financial covenants in our debt instruments, repay indebtedness and access new sources of indebtedness and/or provide additional liquidity for future capital expenditures; actions by third parties, including Mid-Con Energy Partners, LP; our ability to perform property management services as expected; changes in the value of securities in which we invest; fluctuations in or sustained low commodity prices; risks associated with derivative positions; our ability to complete acquisitions or other methods of growth and realize expected value from such transactions; the need to take impairments on properties due to lower commodity prices; general trading market volatility; outbreaks and pandemics, even outside our areas of operation, including COVID-19; the ability of our management team to execute its plans or to meet its goals; shortages of drilling equipment, oil field personnel and services; unavailability of gathering systems, pipelines and processing facilities; performance of employees; the possibility that government policies may change or governmental approvals may be delayed or withheld; and the other factors discussed under the “Risk Factors” heading in our annual report on Form 10-K for the year ended December 31, 2019 and our other reports filed with or furnished to the SEC. Additional information on these and other factors, many of which may be unknown or unpredictable at this time, which could affect Contango’s operations or financial results are included in Contango’s reports on file with the SEC. The unprecedented nature of the current industry decline and the COVID-19 pandemic increase the unpredictable nature of many risks, including those unknown to us, and may amplify the impact of other risks known to us. 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 speak only as of the date they were made and 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, except as required by law.
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