Contango Announces Third Quarter 2020 Financial Results
Third Quarter 2020 Highlights and Recent Developments
- Achieved run rate LOE savings on
Central Oklahoma properties of 48% since taking over operations in the fourth quarter of 2019 and 38% savings relative to assumptions in our 2019 year-endSEC reserves. These savings are expected to increase the PDP PV-10 of the properties at 2020 year-end by more than 50% when measured based on 2019 year-end reserves assumptions. - Production sales of 1,587 Mboe for the quarter, or 17.2 Mboe per day, including approximately 0.5 Mboe per day produced during the second quarter and placed into excess storage capacity until sold in the third quarter at higher prices. Excluding this sale of second quarter oil inventory, our production sales were 1,537 Mboe for the quarter, or 16.7 Mboe per day, nearly three times the 5.6 Mboe per day produced in the prior year quarter, primarily due to additional production from the properties acquired from
White Star Petroleum, LLC and certain affiliates (collectively, “White Star”) andWill Energy Corporation (“Will Energy”) in the fourth quarter of 2019. Production sales also came in at the high end of guidance for the quarter. - Total operating expenses of
$17.2 million for the quarter, and operating expenses exclusive of production and ad valorem taxes of$15.6 million , at approximately 10% below the low end of guidance due to ongoing internal cost savings initiatives. - Net loss of
$6.8 million compared to a net loss of$7.8 million in the prior year quarter. - Recurring Adjusted EBITDAX (a non-GAAP measure, as defined and presented herein) of
$16.2 million , compared to$5.2 million in the prior year quarter primarily due to the properties acquired fromWhite Star and Will Energy. - The previously disclosed Management Services Agreement (“MSA”) with Mid-Con Energy Partners, LP (“Mid-Con”), under which the Company provides technical, management, and administrative services as operator of record on Mid-Con’s oil and gas properties as part of the Company’s new, cost-effective “fee for service” management business, became effective on
July 1, 2020 . The Company recorded$1.0 million in revenue related to the MSA in the third quarter of 2020. - Subsequent to quarter end, the Company entered into an Agreement and Plan of Merger with
Mid-Con and Mid-Con Energy GP, LLC , the general partner of Mid-Con (“Mid-Con GP”), pursuant to which Mid-Con will merge with and into a wholly-owned, direct subsidiary of the Company (the “Mid-Con Acquisition”). The Mid-Con Acquisition is expected to close in late 2020 or early 2021, at which time the MSA will be terminated. See Note 13 – “Subsequent Events” in our recently filed Form 10-Q for the third quarter of 2020 for further information. - Subsequent to quarter end, the Company entered into an amendment to its revolving credit agreement with
JPMorgan Chase Bank N.A ., as administrative agent, and the lenders party thereto (the “Credit Agreement”) under which, among other things, the Company’s borrowing base will be increased from$75 million to$130 million upon the closing of the Mid-Con Acquisition. See Note 13 – “Subsequent Events” in our recently filed Form 10-Q for the third quarter of 2020 for further information. - Subsequent to quarter end, the Company completed a private placement with a select group of institutional and accredited investors for the sale of 26,451,988 shares of the Company’s common stock for gross proceeds of approximately
$39.7 million . The immediate use of those proceeds was for the repayment of debt outstanding under our Credit Agreement and general corporate purposes, including costs and fees of the offering and future producing acquisitions. See Note 13 – “Subsequent Events” in our recently filed Form 10-Q for the third quarter of 2020 for further information.
Management Commentary
“Protecting our liquidity is also a priority for us as we look to potentially take advantage of acquisition opportunities in the current environment. Consequently, through our hedging program we have price protected approximately 71% of our forecasted PDP oil production for the remainder of 2020 with swaps at an average floor price of
Impact of the COVID-19 Pandemic and 2020 Plan Changes
The COVID-19 pandemic has resulted in a severe worldwide economic downturn, significantly disrupting the demand for oil throughout the world, and has created significant volatility, uncertainty and turmoil in the oil and gas industry. This has led to a significant global oversupply of oil and a subsequent substantial decrease in oil prices. While global oil producers, including the
- work from home initiatives for all but critical staff and the implementation of social distancing measures;
- a company-wide effort to cut costs throughout our operations;
- utilization of our available storage capacity to temporarily store, when appropriate, a portion of our production in order to market that oil at a later date and capitalize on the contango in the commodity price curve;
- suspension of any further plans for operated onshore and offshore drilling in 2020;
- pursuit of additional “fee for service” opportunities similar to the MSA entered into in
June 2020 with Mid-Con, which will be terminated at the closing of the Mid-Con Acquisition; and - potential acquisitions of PDP-heavy assets, with attractive, discounted valuations, in stressed/distressed scenarios or from non-industry owners.
Summary of Third Quarter Financial Results
Net loss for the three months ended
Average weighted shares outstanding were approximately 131.7 million and 41.8 million for the current and prior year quarters, respectively.
The Company reported Adjusted EBITDAX, a non-GAAP measure defined below, of approximately
Revenues for the current quarter were approximately
Production sales for the third quarter were approximately 1,587 Mboe, or 17.2 Mboe per day, at the upper level of guidance for the quarter, compared to 516 Mboe, or 5.6 Mboe per day for the third quarter of 2019. The properties acquired from
The weighted average equivalent sales price during the three months ended
Operating expenses for the three months ended
DD&A expense for the three months ended
Total G&A expenses were
Loss from our investment in affiliates (i.e., Exaro Energy III (“Exaro”)) for the three months ended
Loss on derivatives for the three months ended
2020 Capital Program & Capital Resources
Capital costs for the three months ended
We anticipate that the remainder of our 2020 capital budget will be very limited, with our focus being on preserving our financial liquidity, flexibility and identifying opportunities for cost efficiencies in all areas of our operations. Our total 2020 capital expenditure budget is currently estimated at approximately
As of
On
On
Derivative Instruments
As of
Commodity | Period | Derivative | Volume/Month | Price/Unit | |||||||||
Oil | Collar | 3,442 | Bbls | $ | 52.00 - 65.70 | (1) | |||||||
Oil | Swap | 15,000 | Bbls | $ | 57.74 | (1) | |||||||
Oil | Swap | 2,500 | Bbls | $ | 54.33 | (1) | |||||||
Oil | Swap | 3,500 | Bbls | $ | 54.33 | (1) | |||||||
Oil | Swap | 35,000 | Bbls | $ | 54.70 | (1) | |||||||
Oil | Swap | 35,000 | Bbls | $ | 54.58 | (1) | |||||||
Oil | Swap | 19,000 | Bbls | $ | 50.00 | (1) | |||||||
Oil | Swap | 12,000 | Bbls | $ | 50.00 | (1) | |||||||
Oil | Swap | 10,000 | Bbls | $ | 50.00 | (1) | |||||||
Oil | Swap | 62,000 | Bbls | $ | 52.00 | (1) | |||||||
Oil | Swap | 55,000 | Bbls | $ | 52.00 | (1) | |||||||
Oil | Swap | 64,000 | Bbls | $ | 52.00 | (1) | |||||||
Natural Gas | Swap | 40,000 | Mmbtus | $ | 2.532 | (2) | |||||||
Natural Gas | Swap | 375,000 | Mmbtus | $ | 2.696 | (2) | |||||||
Natural Gas | Swap | 350,000 | Mmbtus | $ | 2.53 | (2) | |||||||
Natural Gas | Swap | 350,000 | Mmbtus | $ | 2.532 | (2) | |||||||
Natural Gas | Swap | 185,000 | Mmbtus | $ | 2.505 | (2) | |||||||
Natural Gas | Swap | 120,000 | Mmbtus | $ | 2.505 | (2) | |||||||
Natural Gas | Swap | 10,000 | Mmbtus | $ | 2.505 | (2) | |||||||
Natural Gas | Swap | 185,000 | Mmbtus | $ | 2.508 | (2) | |||||||
Natural Gas | Swap | 120,000 | Mmbtus | $ | 2.508 | (2) | |||||||
Natural Gas | Swap | 10,000 | Mmbtus | $ | 2.508 | (2) | |||||||
Natural Gas | Swap | 650,000 | Mmbtus | $ | 2.508 | (2) | |||||||
Natural Gas | Swap | 400,000 | Mmbtus | $ | 2.508 | (2) | |||||||
Natural Gas | Swap | 580,000 | Mmbtus | $ | 2.508 | (2) | |||||||
Natural Gas | Swap | 70,000 | Mmbtus | $ | 2.36 | (2) | |||||||
Natural Gas | Swap | 350,000 | Mmbtus | $ | 2.36 | (2) | |||||||
Natural Gas | Swap | 780,000 | Mmbtus | $ | 2.542 | (2) |
(1) Based on West Texas Intermediate crude oil prices.
(2) Based on Henry Hub NYMEX natural gas prices.
In addition to the above financial derivative instruments, as of
As of
In
Commodity | Period | Derivative | Volume/Month | Price/Unit | |||||||||
Oil | Swap | 25,000 | Bbls | $ | 42.04 | (1) | |||||||
Natural Gas | Swap | 650,000 | Mmbtus | $ | 2.515 | (2) | |||||||
Natural Gas | Swap | 350,000 | Mmbtus | $ | 2.515 | (2) | |||||||
Natural Gas | Swap | 250,000 | Mmbtus | $ | 3.149 | (2) |
(1) Based on West Texas Intermediate crude oil prices.
(2) Based on Henry Hub NYMEX natural gas prices.
Selected Financial and Operating Data
The following table reflects certain comparative financial and operating data for the three and nine months ended
Three Months Ended | Nine months ended | |||||||||||||||||
2020 | 2019 | % | 2020 | 2019 | % | |||||||||||||
Offshore Volumes Sold: | ||||||||||||||||||
Oil and condensate (Mbbls) | 7 | 9 | -22 | % | 25 | 32 | -22 | % | ||||||||||
Natural gas (Mmcf) | 1,365 | 1,545 | -12 | % | 3,849 | 4,506 | -15 | % | ||||||||||
Natural gas liquids (Mbbls) | 21 | 40 | -48 | % | 88 | 164 | -46 | % | ||||||||||
Thousand barrels of oil equivalent (Mboe) | 256 | 306 | -16 | % | 754 | 947 | -20 | % | ||||||||||
Onshore Volumes Sold: | ||||||||||||||||||
Oil and condensate (Mbbls) | 436 | 122 | 257 | % | 1,284 | 351 | 266 | % | ||||||||||
Natural gas (Mmcf) | 3,588 | 313 | 1046 | % | 11,219 | 873 | 1185 | % | ||||||||||
Natural gas liquids (Mbbls) | 297 | 36 | 725 | % | 868 | 102 | 751 | % | ||||||||||
Thousand barrels of oil equivalent (Mboe) | 1,331 | 210 | 534 | % | 4,022 | 599 | 571 | % | ||||||||||
Total Volumes Sold: | ||||||||||||||||||
Oil and condensate (Mbbls) | 443 | 131 | 238 | % | 1,309 | 383 | 242 | % | ||||||||||
Natural gas (Mmcf) | 4,953 | 1,858 | 167 | % | 15,068 | 5,379 | 180 | % | ||||||||||
Natural gas liquids (Mbbls) | 318 | 76 | 318 | % | 956 | 266 | 259 | % | ||||||||||
Thousand barrels of oil equivalent (Mboe) | 1,587 | 516 | 208 | % | 4,776 | 1,546 | 209 | % | ||||||||||
Daily Sales Volumes: | ||||||||||||||||||
Oil and condensate (Mbbls) | 4.8 | 1.4 | 243 | % | 4.8 | 1.4 | 243 | % | ||||||||||
Natural gas (Mmcf) | 53.8 | 20.2 | 166 | % | 55.0 | 19.7 | 179 | % | ||||||||||
Natural gas liquids (Mbbls) | 3.5 | 0.8 | 338 | % | 3.5 | 1.0 | 250 | % | ||||||||||
Thousand barrels of oil equivalent (Mboe) | 17.2 | 5.6 | 207 | % | 17.4 | 5.7 | 205 | % | ||||||||||
Average sales prices: | ||||||||||||||||||
Oil and condensate (per Bbl) | $ | 39.30 | $ | 55.73 | -29 | % | $ | 36.76 | $ | 55.10 | -33 | % | ||||||
Natural gas (per Mcf) | $ | 1.60 | $ | 2.31 | -31 | % | $ | 1.51 | $ | 2.56 | -41 | % | ||||||
Natural gas liquids (per Bbl) | $ | 15.73 | $ | 12.82 | 23 | % | $ | 12.47 | $ | 16.56 | -25 | % | ||||||
Total (per Boe) | $ | 19.13 | $ | 24.31 | -21 | % | $ | 17.33 | $ | 25.44 | -32 | % | ||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||
2020 | 2019 | % | 2020 | 2019 | % | |||||||||||||||||
Offshore Selected Costs ($ per Boe) | ||||||||||||||||||||||
Operating expenses (1) | $ | 6.78 | $ | 5.89 | 15 | % | $ | 6.05 | $ | 5.10 | 19 | % | ||||||||||
Production and ad valorem taxes | $ | 0.27 | $ | 0.44 | -39 | % | $ | 0.36 | $ | 0.46 | -22 | % | ||||||||||
Onshore Selected Costs ($ per Boe) | ||||||||||||||||||||||
Operating expenses (1) | $ | 10.43 | $ | 14.15 | -26 | % | $ | 11.71 | $ | 16.34 | -28 | % | ||||||||||
Production and ad valorem taxes | $ | 1.10 | $ | 2.51 | -56 | % | $ | 0.95 | $ | 2.13 | -55 | % | ||||||||||
Average Selected Costs ($ per Boe) | ||||||||||||||||||||||
Operating expenses (1) | $ | 9.85 | $ | 9.25 | 6 | % | $ | 10.82 | $ | 9.46 | 14 | % | ||||||||||
Production and ad valorem taxes | $ | 0.97 | $ | 1.28 | -24 | % | $ | 0.86 | $ | 1.10 | -22 | % | ||||||||||
General and administrative expense (cash) | $ | 2.75 | $ | 10.31 | -73 | % | $ | 3.12 | $ | 8.50 | -63 | % | ||||||||||
Interest expense | $ | 0.67 | $ | 1.93 | -65 | % | $ | 0.93 | $ | 2.05 | -55 | % | ||||||||||
Net Loss (thousands) | $ | (6,805 | ) | $ | (7,838 | ) | $ | (140,094 | ) | $ | (21,417 | ) | ||||||||||
Adjusted EBITDAX (2) (thousands) | $ | 15,827 | $ | 3,011 | $ | 36,936 | $ | 11,586 | ||||||||||||||
Weighted Average Shares Outstanding (thousands) | ||||||||||||||||||||||
Basic | 131,686 | 41,786 | 131,493 | 36,518 | ||||||||||||||||||
Diluted | 131,686 | 41,786 | 131,493 | 36,518 |
(1) Operating expense includes direct lease operating expenses, transportation and workover expenses.
(2) Adjusted EBITDAX is a non-GAAP financial measure. See below for reconciliation to net loss.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
2020 | 2019 | ||||||
ASSETS | (unaudited) | ||||||
Cash and cash equivalents | $ | 2,969 | $ | 1,624 | |||
Accounts receivable, net | 31,797 | 39,567 | |||||
Current derivative asset | 10,509 | 3,819 | |||||
Other current assets | 3,904 | 1,377 | |||||
Net property and equipment | 127,088 | 291,120 | |||||
Investment in affiliates and other non-current assets | 16,552 | 16,319 | |||||
TOTAL ASSETS | $ | 192,819 | $ | 353,826 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) | |||||||
Accounts payable and accrued liabilities | 87,223 | 104,593 | |||||
Other current liabilities | 6,054 | 5,954 | |||||
Long-term debt | 69,369 | 72,768 | |||||
Asset retirement obligations | 45,998 | 49,662 | |||||
Other non-current liabilities | 5,629 | 4,809 | |||||
Total shareholders’ equity (deficit) | (21,454 | ) | 116,040 | ||||
TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY (DEFICIT) | $ | 192,819 | $ | 353,826 |
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
Three Months Ended | Nine Months Ended | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
(unaudited) | ||||||||||||||||
REVENUES | ||||||||||||||||
Oil and condensate sales | $ | 17,415 | $ | 7,281 | $ | 48,127 | $ | 21,126 | ||||||||
Natural gas sales | 7,930 | 4,293 | 22,718 | 13,792 | ||||||||||||
Natural gas liquids sales | 5,003 | 973 | 11,918 | 4,402 | ||||||||||||
Fee for service revenues | 1,000 | — | 1,000 | — | ||||||||||||
Total revenues | 31,348 | 12,547 | 83,763 | 39,320 | ||||||||||||
EXPENSES | ||||||||||||||||
Operating expenses | 17,155 | 5,435 | 55,777 | 16,321 | ||||||||||||
Exploration expenses | (227 | ) | 218 | 11,344 | 691 | |||||||||||
Depreciation, depletion and amortization | 6,185 | 8,473 | 24,131 | 23,602 | ||||||||||||
Impairment and abandonment of oil and gas properties | 47 | 1,336 | 145,925 | 3,170 | ||||||||||||
General and administrative expenses | 6,130 | 5,879 | 17,268 | 15,340 | ||||||||||||
Total expenses | 29,290 | 21,341 | 254,445 | 59,124 | ||||||||||||
OTHER INCOME (EXPENSE) | ||||||||||||||||
Loss from investment in affiliates, net of income taxes | (126 | ) | (608 | ) | (13 | ) | (151 | ) | ||||||||
Gain from sale of assets | 38 | 192 | 4,471 | 601 | ||||||||||||
Interest expense | (1,057 | ) | (998 | ) | (4,421 | ) | (3,169 | ) | ||||||||
Gain (loss) on derivatives, net | (7,369 | ) | 1,881 | 30,526 | 1,068 | |||||||||||
Other income | 319 | 519 | 1,456 | 522 | ||||||||||||
Total other income (expense) | (8,195 | ) | 986 | 32,019 | (1,129 | ) | ||||||||||
NET LOSS BEFORE INCOME TAXES | (6,137 | ) | (7,808 | ) | (138,663 | ) | (20,933 | ) | ||||||||
Income tax provision | (668 | ) | (30 | ) | (1,431 | ) | (484 | ) | ||||||||
NET LOSS | $ | (6,805 | ) | $ | (7,838 | ) | $ | (140,094 | ) | $ | (21,417 | ) |
Non-GAAP Financial Measures
This news release includes certain non-GAAP financial information as defined by
Adjusted EBITDAX represents net income (loss) before interest expense, taxes, depreciation, depletion and amortization, and oil and gas exploration expenses (“EBITDAX”) as further adjusted to reflect the items set forth in the table below and is a measure required to be used in determining our compliance with financial covenants under our credit facility. Recurring Adjusted EBITDAX represents Adjusted EBITDAX exclusive of non-recurring business combination and strategic advisory fees and legal judgments.
We have included Adjusted EBITDAX in this release to provide investors with a supplemental measure of our operating performance and information about the calculation of some of the financial covenants that are contained in our credit agreement. We believe Adjusted EBITDAX is an important supplemental measure of operating performance because it eliminates items that have less bearing on our operating performance and therefore highlights trends in our core business that may not otherwise be apparent when relying solely on GAAP financial measures. We also believe that securities analysts, investors and other interested parties frequently use Adjusted EBITDAX in the evaluation of companies, many of which present Adjusted EBITDAX when reporting their results. Adjusted EBITDAX is a material component of the covenants that are imposed on us by our credit agreement. We are subject to financial covenant ratios that are calculated by reference to Adjusted EBITDAX. Non-compliance with the financial covenants contained in our credit agreement could result in a default, an acceleration in the repayment of amounts outstanding and a termination of lending commitments. Our management and external users of our financial statements, such as investors, commercial banks, research analysts and others, also use Adjusted EBITDAX to assess:
- the financial performance of our assets without regard to financing methods, capital structure or historical cost basis;
- the ability of our assets to generate cash sufficient to pay interest costs and support our indebtedness;
- our operating performance and return on capital as compared to those of other companies in our industry, without regard to financing or capital structure; and
- the feasibility of acquisitions and capital expenditure projects and the overall rates of return on alternative investment opportunities.
The following table reconciles net income to EBITDAX and Adjusted EBITDAX and Recurring Adjusted EBITDAX for the periods presented:
Three Months Ended | Nine Months Ended | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
(in thousands) | ||||||||||||||||
Net loss | $ | (6,805 | ) | $ | (7,838 | ) | $ | (140,094 | ) | $ | (21,417 | ) | ||||
Interest expense | 1,057 | 998 | 4,421 | 3,169 | ||||||||||||
Income tax provision | 668 | 30 | 1,431 | 484 | ||||||||||||
Depreciation, depletion and amortization | 6,185 | 8,473 | 24,131 | 23,602 | ||||||||||||
Impairment of oil and gas properties | 60 | 1,167 | 145,938 | 2,246 | ||||||||||||
Exploration expense | (227 | ) | 218 | 11,344 | 691 | |||||||||||
EBITDAX | $ | 938 | $ | 3,048 | $ | 47,171 | $ | 8,775 | ||||||||
Unrealized loss (gain) on derivative instruments | $ | 13,037 | $ | (1,010 | ) | $ | (8,155 | ) | $ | 1,068 | ||||||
Non-cash stock-based compensation charges | 1,764 | 557 | 2,378 | 2,193 | ||||||||||||
Loss (gain) on sale of assets and investment in affiliates | 88 | 416 | (4,458 | ) | (450 | ) | ||||||||||
Adjusted EBITDAX | $ | 15,827 | $ | 3,011 | $ | 36,936 | $ | 11,586 | ||||||||
Non-recurring business combination expenses and strategic fees | $ | 326 | $ | 94 | $ | 2,553 | $ | 1,830 | ||||||||
Non-recurring legal judgments | 90 | 2,134 | 246 | 2,134 | ||||||||||||
Recurring Adjusted EBITDAX | $ | 16,243 | $ | 5,239 | $ | 39,735 | $ | 15,550 |
In addition to Adjusted EBITDAX and Recurring Adjusted EBITDAX, we may provide additional non-GAAP financial measures, including Operating expenses exclusive of production and ad valorem taxes, Recurring G&A expenses, Recurring Cash G&A expenses and production sales in the current period exclusive of second quarter oil inventory, because our management believes providing investors with this information gives additional insights into our profitability, cash flows and expenses.
Adjusted EBITDAX, Recurring Adjusted EBITDAX and other non-GAAP measures in this release are not presentations made in accordance with generally accepted accounting principles, or GAAP. As discussed above, we believe that the presentation of non-GAAP financial measures in this release is appropriate. However, when evaluating our results, you should not consider the non-GAAP financial measures in isolation of, or as a substitute for, measures of our financial performance as determined in accordance with GAAP, such as net loss. For example, Adjusted EBITDAX has material limitations as a performance measure because it excludes items that are necessary elements of our costs and operations. Because other companies may calculate Adjusted EBITDAX differently than we do, Adjusted EBITDAX as presented in this release is not, comparable to similarly-titled measures reported by other companies.
Guidance for the Fourth Quarter 2020
Production sales | 14,000 - 16,000 Boe per day | |
LOE (including transportation and workovers) | ||
Recurring Cash G&A (non-GAAP) | ||
We do not provide a reconciliation of Recurring Cash G&A expense guidance to the corresponding GAAP measure because we are unable to predict with reasonable certainty the non-cash stock based compensation expense and non-recurring expenses associated with our strategic initiatives without unreasonable effort. These items are uncertain and depend on various factors and are not expected to be material to the results computed in accordance with GAAP.
Teleconference Call
Contango management will hold a conference call to discuss the information described in this press release on
About
Contango Oil &
ADDITIONAL INFORMATION AND WHERE TO FIND IT
This communication may be deemed to be solicitation material in respect of the proposed merger (the “Proposed Merger”). The Proposed Merger will be submitted to Contango’s shareholders and Mid-Con’s unitholders for their consideration. Contango and Mid-Con intend to file a preliminary consent statement/proxy statement/prospectus (the “Consent Statement/Proxy Statement/Prospectus”) with the
The Consent Statement/Proxy Statement/Prospectus, any amendments or supplements thereto and other relevant materials, and any other documents filed by Contango or Mid-Con with the
NO OFFER OR SOLICITATION
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
PARTICIPANTS IN THE SOLICITATION
Contango, Mid-Con and certain of their respective executive officers, directors, other members of management and employees may, under the rules of the
Forward-Looking Statements and Cautionary Statements
This 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 our estimates of future production and other guidance (including information regarding production, lease operating expenses, cash G&A expenses, and DD&A Rate), the Company’s pending acquisition of Mid-Con, amendments to and borrowing base of the Company’s Credit Agreement, the Company’s drilling program and capital expenditures, our liquidity and access to capital, expected reduction in overall drilling costs, the potential impact of the COVID-19 pandemic including reduced demand for oil and natural gas, the low and volatile commodity price environment, our new fee for services offering, the impact of our derivative instruments, the accuracy of our projections of future production, future results of operations, ability to identify and complete acquisitions, ability to realize expected benefits of acquisitions the quality and nature of the asset base, our outlook in the current industry downturn, the assumptions upon which estimates are based 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”, “intends”, “forecasts”, “view”, “efforts”, “goal”, “positions” or words and phrases 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); risks relating to the Company’s pending acquisition of Mid-Con, including the risk that the acquisition will not be completed on the timeline or terms currently contemplated, that the Company’s and Mid-Con’s businesses will not be integrated successfully, that the cost savings, synergies and growth from the acquisition may not be fully realized or may take longer to realize than expected, and that management attention will be diverted to transaction-related issues; potential liability resulting from litigation related to the Mid-Con acquisition; the risk that transaction costs for the Mid-Con Acquisition may be higher than anticipated; the effect of our pending acquisition (or announcement thereof) of Mid-Con on our stock price or Mid-Con’s unit price; uncertainties as to the availability and cost of financing; our relationships with lenders; 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; any reduction in our borrowing base and our ability to avoid or repay excess borrowings as a result of such reduction; our ability to execute on our strategy, including execution of acquisitions, any changes in our strategy or our fee for service offering; fluctuations in or sustained low commodity prices; availability and effect of storage of production; expected benefits of and risks associated with derivative positions; our ability to realize cost savings; our ability to execute on and realize expected value from acquisitions and to complete strategic dispositions of assets and realize the benefits of such dispositions; the need to take impairments on properties due to lower commodity prices; the limited trading volume of our common stock and general trading market volatility; outbreaks and pandemics, even outside our areas of operation, including COVID-19 and the resulting economic slowdown, governmental actions, stay-at-home orders, and other interruptions to our operations; 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; the possibility that government policies may change or governmental approvals may be delayed or withheld; and the other factors discussed in our reports filed or furnished with the
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Senior Vice President and Chief Financial and Accounting Officer |
Source: Contango Oil & Gas